The California Supreme Court, in yet another ruling adverse to companies that do business in the state, has adopted a new test for determining whether a worker is an employee or an independent contractor under the state’s so-called wage orders.

The new test explicitly rejects the multifactor balancing test used for such determinations under federal law, and under many state laws, and instead requires an employer to prove each element of a three-part “ABC” test in order to show that a worker is properly classified as an independent contractor.

The ruling will make it harder for California businesses to utilize independent contractors, and for those that do, will expose them to a greater likelihood of facing a class action lawsuit to resolve alleged misclassification claims.

A copy of the Court’s decision in Dynamex Operations West, Inc. v. Superior Court, No. S222732 (Cal. April 30, 2018), is available here.

Members of the Center for Workplace Compliance (CWC) can read more here.