California's Supreme Court has ruled that the standard for classifying employees or independent contractors should be changed from the old standard to the new ABC test used by Massachusetts and other states including New Jersey. The old test centered on whether the employer had the right to control the employee's activities. The new test says that everyone is an employee unless the employer proves that the worker (1) is free from control and direction under contract and in fact; and (2) performs work that is outside the usual course of the hiring entity's business; and (3) is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.
Why This Is Important…
The new test creates a strong presumption that all worker relationships are employment relationships. California has the largest economy in the United States. It's moving to this new standard means that it is more likely to be adopted broadly.