In 2019, California adopted a new law that more clearly defined employment status in the state. It clearly distinguishes an employee from an independent contractor and identifies exceptions to the stringent requirements under the law.
Unfortunately, in many cases, employees receive independent contractor classifications. Therefore, this is how to distinguish between employees and independent contractors.
Independent contractors
Under California law, independent contractors need to pass an ABC, manner and means, control or an economic realities test. Companies that hire independent contractors cannot direct or control their contractor’s work. They cannot have any control over how the individual completes the work either. The work the contractor does should not be work that the company typically hires employees to do.
Finally, the contractor should regularly do the type of work the company has asked him or her to do, and the trade, business or occupation should match the work the contractor regularly does. These professionals can work for any entity or multiple projects at once.
Employees
Employers can control and direct the work of their employees. They can determine how, when and where the work occurs. They determine their employers’ hours, wages and work environment.
Employees have numerous legal rights that independent contractors do not, such as workers’ compensation access.
Exceptions
Some professions are exempt from these requirements, including doctors, contractors, freelance writers, tutors, insurance brokers, lawyers, architects, financial services employees, hair stylists and manicurists and psychologists. These individuals must pass the Bordello test.
Proposition 22 also defines requirements for gig workers, including a company’s lack of control over work hours and days. These companies cannot force workers to accept jobs or provide services, and they cannot forbid them from accepting work in any capacity.
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