It’s not always easy to tell the difference between California independent contractors and employees.
However, it is crucial that companies understand the difference between employees vs. independent contractors because each category enjoys distinct legal rights and responsibilities.
Also, the employee vs. contractor analysis is essential to understand for tax and labor law purposes.
Read on to learn more about the three major factors that California courts use to distinguish an employee vs. independent contractor.
If you still have questions or want to learn more, contact an experienced labor and employment lawyer right away.
Three Key Differences Between Employee vs. Independent Contractor in California
There are many unique characteristics that distinguish employees vs. independent contractors. However, California law assesses three specific factors as part of what is known as the “ABC test.”
The three factors are autonomy, benefits, and custom. Assessing these three factors will help an employer understand the worker’s status.
Factor #1: Autonomy
The first factor of the ABC test assesses whether the worker is under the control and direction of the hiring entity. An employee has to contend with a high degree of control and oversight over their work.
An independent contractor, on the other hand, has much more autonomy over how and when they perform the work. A contractor can also have some input over the final product, whereas an employee cannot.
A contract with the worker that directs and controls the person’s work will automatically create an employee-employer relationship.
Factor #2: Business
The second part of the ABC test assesses whether the worker performs work that is outside of the usual course of the hiring entity’s business.
An employee will perform work exclusively for their employer. A contractor, on the other hand, will perform work for multiple clients at once.
None of those clients will be able to influence or limit the contractor’s ability to perform work for any other client.
Factor #3: Custom
The final factor of the ABC test assesses whether the worker is “customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”
An employer will be limited to performing work in one trade or line of business, while an independent contractor is free to work in multiple trades and occupations.
Want to Learn More About the Differences Between Employees and Independent Contractors?
Although California has officially mandated the use of the ABC test through recent legislation, there can still be grey areas when it comes to understanding the difference between California independent contractors and employees.
Moreover, the stakes are high when it comes to classifying workers correctly. Misclassification can be grounds for a costly lawsuit. That’s why your best option is to contact a qualified employment law firm sooner rather than later.
Here at Workplace Rights Law Group, our team can help you navigate the complicated legal world of worker classification. We have many years of experience helping our clients in employment classification situations.
Also, we focus on quality over quantity, which has helped us produce amazing results for our clients in the past. Our strategy has also made our customers highly satisfied, as our many client testimonials will attest.
To learn more about employee classification, reach out to one of our labor attorneys today. All of our initial case reviews are free, so you have nothing to lose.
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Theo Khachaturian
Theo is a trial & appellate lawyer whose practice has emphasized wage-and-hour class actions, business disputes, wrongful termination, discrimination, harassment, and intellectual property theft. He has tried civil cases and argued before various California Courts of Appeal.