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When is a worker an employee versus an independent contractor?

On Behalf of | Apr 5, 2021 | Employment Law

Many people in California work as artists, writers, actors and other types of work in a gig economy. However, it is essential that employers in the state recognize the difference between employees and independent contractors. The following are various tests employers can use to determine if their workers are employees or independent contractors.

The ABC test

The ABC test stems from AB 5, which was signed into law in September 2019. It provides employers with a means of determining whether workers in California are independent contractors or employees. Under the ABC test, a person will be presumed to be an employee unless the following conditions exist:

  • The worker is not controlled or directed by the hiring entity both under the contract between the worker and business and in the actual execution of the duties agreed upon in the contract;
  • The worker executes duties outside of the normal course of the business’s duties; and
  • The worker is customarily engaged as an independent worker in either their trade, occupation or business in a manner that is the same as the work being performed for the contracting company.

The ABC test is meant to help employers determine whether they must treat workers as employees or independent contractors.

The “Borello” Test

The “Borello” test originates from a California Supreme Court decision, S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations. This test names multiple factors to determine whether an employer has such control over the work that the worker should be considered an employee rather than an independent contractor. The following factors will be considered:

  • Whether the worker holds themselves out as an independent contractor;
  • Whether the work performed is a regular or integral part of the employer’s business;
  • Whether the employer supplies the worker with the tools to do the job and a place to do the job;
  • Whether the worker has invested in the business;
  • Whether the service provided requires a special skill
  • The nature of the occupation, and whether work in this occupation is generally performed either under the employer’s direction or alternatively by a specialist without supervision;
  • The worker’s opportunity to enjoy profits or suffer losses depending on their managerial skill;
  • How long services are being performed;
  • How permanent the relationship between the worker and employer is;
  • How the worker is paid;
  • Whether the worker brings in their own employees;
  • Whether the worker is subject to at-will firing; and
  • Whether the worker and employer are under the understanding that they are subject to an employer-employee relationship.

Under the Borello test, no one factor is determinative; all potentially relative facts will be considered.

How does the Borello test compare to the ABC test?

The ABC test is meant to help people determine in advance whether they are an independent contractor or an employee. Simply put, it is meant to be more predictable than the Borello test. However, unlike the ABC test, under the Borello test, no one factor is given more weight than any other factor.

Learn more about employment law in California

Ultimately, this post is for informational purposes only and does not contain legal advice. Those who want to learn more about employment law in California are encouraged to visit our firm’s website to learn more.


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