Recently, the California Supreme Court decided that its ruling in Dynamex Operations West, Inc. v. Superior Court applies retroactively. The Dynamex case set a new legal standard for determining a California worker’s employee classification. Before the decision, businesses relied on a judicial “right to control” test for classifying workers under California’s Wage Orders. California Wage Orders regulate worker rest breaks, meal periods, and overtime. In line with several other states, the court replaced the “right to control” test, with the stringent “ABC” test.
Under the new legal standard, California wage orders carry a presumption that any worker performing work for a business is an employee. As such, the law entitles these employees to the protection set forth by California Wage Orders. A hiring entity can only overcome the presumption if they can prove three elements:
- That the worker is free from the control and direction of the hiring entity, related to the worker’s performance and in connection with the parties’ contract;
- The worker is engaged in work outside the hiring entity’s usual course of business; and
- The worker is routinely engaged in an independently established trade, occupation or business, of the same nature as the work performed for the hirer.