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Does the ABC test determine the status of all California workers?

On Behalf of | Sep 17, 2021 | Employee Classification

California largely uses the ABC test to classify workers as employees or independent contractors under the state’s labor code, unemployment code and the Industrial Welfare Commission. However, certain situations exist in which the test does not apply.

As a worker in the state, you may benefit from understanding when the ABC test applies to your hiring and employment.

Predefining the employment relationship

According to the California Department of Industrial Relations, the ABC test does not apply in situations when the legislature or IWC has defined the employment relationship. The test may also not apply to particular contracting relationships and occupations. For example, this includes certain marketing and promoting occupations, licensed insurance agents and brokers, physicians and other medical professionals, and direct salespersons.

For reasons other than express exceptions, the court will sometimes determine the ABC test does not apply to a hiring or employment situation. In such cases, the court may use the Borello test. Established through a state supreme court case in 1989, this test uses multiple factors to make employment classification determinations.

Differing from the Borello test

While both the ABC test and the Borello test assume you are an employee, the ABC test requires your employer must show through any of the test’s three parts that you do not classify as an employee. The Borello test, on the other hand, allows the court to consider all the potentially relevant factors in determining your employment status.

Your employment status affects factors of your work, from when and how you receive payments to how you get taxed and what benefits you have entitlement to receive. Knowing your classification based on the ABC test or exemptions may help you protect your rights in the workplace.