Workers can be divided into three main categories: employee, independent contractor, and volunteer. A cashier at Walmart, for example, is probably an employee, while a long-distance trucker who works for several trucking companies is probably an independent contractor.
It matters whether your worker is classified as an employee or an independent contractor. Because when the worker is a subcontractor, you are relieved of the legal responsibility of:
paying payroll taxes, overtime, and minimum wage;
complying with other wage and hour requirements such as providing meal and rest breaks;
reimbursing workers for business expenses incurred in the performance of their duties; and
assuming civil liability for the employee’s wrongful behavior causing a personal injury.
The Borello Test
Although employers frequently misclassify their employees as independent contractors, under California labor law, a worker is presumed to be an employee until proven otherwise. It is ultimately a court (or an arbitrator) that decides how a worker should be classified for legal purposes. There is no clear-cut rule; courts use a balancing test to classify workers.
In California, the applicable test for many years has been the Borello test. Under the Borello test, the court will weigh the following factors when classifying a worker:
Whether the worker is engaged in an occupation that is distinct from that of the hiring party
Whether the work is part of the hiring party’s regular business
Whether the hiring party or the worker supplies work tools and/or the work location
Whether the worker supplied his own equipment or materials or employed assistants
Whether the work requires special skills
Whether the work is customarily performed without the supervision of the hiring party
The worker’s opportunity for profit or loss
The duration of the performance of the services
The degree of permanence of the working relationship
Whether payment is by time period or by the job
Whether the parties believe they are creating an employer-employee relationship
Wage Order Disputes
Due to the recent California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court (Lee), the employee/independent contractor classification determination has been modified for the purpose of resolving wage/hour disputes.
Under the Dynamex test, a worker will be presumed to be an employee unless:
the worker is free from the control and direction of the hiring party, both in contractual language and in fact;
the work is outside the normal course of the hiring party’s business; and
the worker is habitually engaged in an independently established occupation involving the same type of work.
The Legal Gray Area
The Dynamex standard applies to wage-hour disputes only. It is not clear at this point, however, whether courts will extend its application to other aspects of California labor and employment law or even to personal injury law.
Seize the Bull by the Horns
If you are involved in a dispute relating to the distinction between an employee and an independent contractor or if you simply need advice on how to avoid such as dispute, contact the labor and employment lawyers at CKB Vienna LLP. We serve clients from all overUpland, Fontana, Ontario, Chino Hills, Claremont, Rancho Cucamonga, including Alta Loma and Etiwanda.
We can be reached by phone by calling 909-980-1040 or online by filling out our contact form.