California “ABC test” expands definition of employee

Under both California and federal law, whether an individual should properly be classified as an employee or an independent contractor has considerable significance for workers, businesses, and the public, the California Supreme Court observed in a highly anticipated—and lengthy—decision in which it found the trial court did not err in concluding that the “suffer or permit to work” definition of “employ” contained in the state wage order applicable to the transportation industry may be relied upon in evaluating whether a worker is an employee or an independent contractor for purposes of the wage order’s obligations. Further, the wage order’s suffer or permit to work definition must be interpreted broadly to treat as “employees,” and thereby provide the wage order’s protection to, all workers who would ordinarily be viewed as working in the hiring business, said the court. The suffer or permit to work definition “is a term of art that cannot be interpreted literally in a manner that would encompass within the employee category the type of individual workers, like independent plumbers or electricians, who have traditionally been viewed as genuine independent contractors who are working only in their own independent business. (Dynamex Operations West, Inc., CalSCt, 168 LC ¶61,859).

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