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How does California’s ABC test determine employee classification?

On Behalf of | Jun 25, 2024 | Misclassification

One of the most critical issues that workers and businesses deal with is the correct classification of employees. In California, the ABC test determines if a worker is an employee or independent contractor.

In addition, this legal standard aims to ensure that workers receive the correct classification and their accompanying benefits and protections. If you are a worker in California, how can knowing the ABC test be vital for you?

Understanding the ABC Test

Employers must apply the ABC test, which has three parts, to their workers. If a worker meets the three criteria, they are an independent contractor. On the other hand, if they fail any one part, they are an employee.

Freedom from control and direction of the employer

First, the worker is free from the control and direction of their hiring entity. This is in connection with the performance of the work, including contractual control and actual control.

Work is outside the usual course of the employer’s business

Second, the worker performs work outside the usual course of their hiring entity’s business. For example, if a retail store hires a plumber to fix a leak, the plumber is likely an independent contractor.

Customary engagement in an independently established trade

Third, the worker is typically engaged in an independently established occupation, business or trade that has the same nature as the work they perform for their hiring entity. This confirms that the worker has an independent business operation.

Knowing and protecting your rights

The ABC test significantly impacts the California workforce. Therefore, understanding it is crucial for both employees and employers.

If you think you are a misclassified employee, seeking legal advice may help you know and protect your rights. Moreover, it may help you navigate the complexities of employment law with more confidence.