High profile companies like Google, Microsoft, Lyft, and FedEx are facing lawsuits of alleged misclassification of contractors which emphasizes just how potentially problematic this could be. It’s not just big business either. They’re the cases raising awareness, but the issue is also prevalent in small businesses. So much so, that the California Supreme Court issued a new three-pronged test for independent contractors called The ABC Test to reduce the ambiguity of whether a worker is a contractor or an employee.
To be a contractor, workers must be:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
- The worker performs work that is outside the usual course of the hiring entity’s business.
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Not only are wrongfully classified contractors missing out on benefits and state protections allowed to employees, but Uncle Sam is missing his tax dollars too. It’s estimated that 1/5 of all U.S. companies are currently misclassifying at least one worker.
If you feel you’ve been misclassified as an independent contractor when you should be an employee, call the employment Law Offices of Garry M. Tetalman today at (805) 879-7518.