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Supreme Court Weighs in on Employee vs. Independent Contractor Debate

By June 12, 2018November 24th, 2021No Comments
Employee vs. Independent Contractor

In an April 30,
2018 decision by the California Supreme Court, dealing with the issue of
whether a delivery drivers’ class should be decertified, the Court addressed
with the factors that should be applied to determine if a worker was an
independent contractor or an employee so as to be covered under a state wage


The decision
dealt with a case wherein drivers for a delivery service had been converted
from employees of that company to independent delivery contractors working
under contracts for those services between them and the company.

Two employees
filed a class action to recover allegedly underpaid wages on behalf of a class
of drivers for the company.

In a long
opinion, reciting the facts of the case and discussion of the law, the
California Supreme Court laid out the ABC rule to be used in determining whether
a person was to be treated as an employee or independent contractor.

The Court held:

“Under this
test, a worker is properly considered an independent contractor to whom a wage
order, does not apply only if the hiring entity establishes:

(A) That the worker
is free from the control and direction of the hirer in connection with the
performance of the work, both under the contract for the performance of such
work and in fact;

(B) That the
worker performs work that is outside the usual course of the hiring entity’s
business; and

(C) That the
worker is customarily engaged in an independently established trade,
occupation, or business of the same nature as the work performed for the hiring

The Court stated
that the hiring entity’s failure to prove any one of these three prerequisites
will be sufficient in itself to establish that the worker is an included
employee, rather than an excluded independent contractor for purposes of the
state wage order requiring minimal wages and working conditions for employees.

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