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Independent Contractor vs. Employee: California Change May Extend Workers’ Compensation Coverage to More Workers

By Kenton Koszdin on May 23, 2018 | In Workers Compensation

Independent Contractor vs. Employee:  California Change May Extend Workers’ Compensation Coverage  to More Workers

The California Supreme Court recently changed how companies classify workers as independent contractors vs. employees.

The Court instituted an “ABC” test, similar to those currently in use in Massachusetts and New Jersey, to replace the prior 10-factor test for determining employee status.

The ABC test is much simpler and considers a worker as an independent contractor rather than an employee if:

  • The worker is free from the control and direction of the hirer in connection with the performance of the work;
  • The worker performs work that is outside of the usual course of the hiring entity’s business; and
  • The worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

Here is a Court-cited example: When a store hires a plumber to fix a leak, that worker would not reasonably be considered a store employee. However, seamstresses sewing at home for a clothing manufacturer – and using materials provided by that manufacturer – would probably be considered employees.

Gig Economy Jobs Will Be Hit Hard

One of the sectors that may be hit hard by this ruling is the so-called “gig economy,” where there is an abundance of freelance work as opposed to permanent jobs. Examples of these gig workers include Uber and Lyft drivers, Airbnb and OneFineStay rentals, GrubHub restaurant ordering and delivery service, ParkingPanda parking service and Freelancer programmers, marketers and content producers.

If these companies must view former “independent contractors” as employees, they may be forced to cover those workers for workers’ compensation. In addition, the businesses will have to follow overtime and minimum-wage laws, meal and rest break regulations, as well as pay unemployment insurance and payroll taxes.

Industry executives estimate that classifying drivers and other gig workers as employees significantly increases costs – a 20-30% increase – over classifying them as contractors.

Let Us Know If You Have Been Injured on the Job

If you or a loved one has been denied worker’s compensation or Social Security Disability (SSD) benefits, it’s important to get an attorney experienced in these types of cases involved immediately. Contact the Kenton Koszdin Law Office, Social Security attorney in Van Nuys, at 800.438.7734 for your initial free consultation. We can help you navigate the application process for the best possible outcome for you and your family.

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