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What is the ABC test for determining employee classification?

On Behalf of | Sep 23, 2022 | Employee Rights, Employment Law

There are some similarities between employees and independent contractors in California, but how they are classified is very important. Employees receive benefits that independent contractors may not receive from the employer. Also, independent contractors do not receive all of the same rights that employees have for wrongful termination, medical leave and other protections.

Due to this fact, some employers have incentives to classify a worker as an independent contractor instead of an employee even if they really act in the same way as an employee. However, in California everyone is considered an employee unless they meet all of the criteria in what is called the ABC test.

Basics of the ABC test

Part A of this test analyzes whether the employer controls the direction and performance of the worker. This could be through the contract itself or through the actual practice of the employer while the worker is working for them.

Part B of the test is whether the worker is providing services that are part of the normal course of the company’s business or whether they are providing services that are not part of the normal business. Independent contractors may be called in to do a part of a job that no one within the business performs. However, if the worker is doing the same tasks as other employees, they would be more likely to be deemed employees.

Part C of the test analyzes whether the worker has their own established business that they are operating while working for another company. If the worker does not have their own business to do the specific work they are doing for the company, they could be an employee. It may not be enough for the workers to state in a contract that they are an independent contractor. Also, if they perform the work for only one company, they may be considered an employee.

All three parts of the ABC test must be satisfied for a worker to be an independent contractor in California. If even one is not satisfied, workers are considered employees and should be granted all of the rights and protections that employees enjoy. If people are wrongly classified and lose benefits as a result or are wrongfully terminated, they may have a claim against the employer. Experienced attorneys understand this complicated area of the law and may be a useful resource.

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