We reported earlier this year that the law regarding the classification of independent contractors changed dramatically under the new “ABC Test.” The California Supreme Court established a presumption that a worker is an employee unless the employer can show (a) the “worker is free from the control and direction of the hirer in connection with the performance of the work” under the contract and in fact; (b) the “worker performs work that is outside the usual course of the hiring entity’s business;” and (c) the worker is “customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
How the ABC Test May Affect Sonoma County Businesses
After the law changed, one outstanding question was whether the new ABC Test would apply retroactively. The Ninth Circuit Court of Appeals answered this question with a resounding yes. In Vazquez v. Jan-Pro Franchising Int’l, Inc., the federal court determined that the ABC Test applies retroactively. Making this strict test retroactive may subject businesses to liability for misclassifying workers as independent contractors even before the new ABC test came into law. Depending on the claim alleged, a plaintiff can potentially claim a misclassification for up to three to four years from the most recent violation. The stakes for misclassifying an employee as an independent contractor are high and this latest decision emphasizes that California businesses must be prepared to address the ABC Test and consider its retroactive application.
Avoid Harmful Legal Exposure with an Experienced Employment Law Attorney
Now is the time to re-evaluate any independent contractor relationships in order to avoid liability going forward.