The Gig Economy under pressure after California court ruling: Court applies ABC Test from April, 2018

Even though the story is from April, 2018, we thought the story was so important we are bringing it up again.

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The Gig Economy under pressure after California court ruling from San Francisco Chronicle. Link is here.

The California's supreme court ruled that many contractors should be classified as employees.  The state also presumes a person is an employee and puts the burden of proof on the employer justify the classification as a contractor.  The state should use the ABC test to determine if a contract is actually and employee.

A) The worker is free from the "direction and control" of the employer in accomplishing tasks.

B) The work is outside the "usual course of business": i.e., a non-core activity. So a FedEx delivery driver performs a "core" function while a plumber fixing a leak at a FedEx warehouse does not.

C) The worker is "customarily engaged" in an independent profession. Again plumbing not picking in an amazon warehouse.

If the employer cannot  prove all three then the worker is an employee.

The court also "threw out" the current contractor determination language that businesses use to evade Fair Labor Standards Act (FLSA) rules and classify employees as contractors.

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The corporate perspective is mostly about how to comply with the law or avoid issues.

Here is a typical corporate legal web site from "Epstein, Becker and Green" which runs the "Wage and hour defense blog".  There law firms usually work for large, low ware employers and help HR departments comply with the wage regulations.

California Supreme Court adopts ABC test for Independent Contractors