California Adopts Strict Independent Contractor Test

Q.  What is the standard for whether an individual is an independent contractor under California law?

A.  On September 11, the California Assembly passed AB 5, a bill that codifies and expands the application of the strict independent contractor test (the “ABC test”) set forth in last year’s decision of the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (2018). If Governor Newsom signs the bill, as expected, it will go into effect on January 1, 2020.

AB 5 creates a presumption that workers are employees unless the “hiring entity” can meet the ABC test by demonstrating that each of the following three conditions is satisfied:

(A) The person 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.

(B) The person performs work that is outside the usual course of the hiring entity’s business.

(C) The person is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

For more information, click here.

Susan K. Lessack

UberBLACK Drivers Are Properly Classified as Independent Contractors

Q.  Have there been any new legal developments on whether gig economy workers can be classified as independent contractors?

A.  On April 11, Judge Michael Baylson of the U.S. District Court for the Eastern District of Pennsylvania became the first judge to grant summary judgment on the issue of whether UberBLACK drivers are employees or independent contractors under the Fair Labor Standards Act (FLSA). Judge Baylson concluded that Uber correctly classified the plaintiffs — drivers who provided “black car” limousine services for Uber — as independent contractors. Razak v. Uber Techs., Inc., No. 16-573 (E.D. Pa. 2018). The plaintiffs intend to appeal. Although the analysis of independent contractor classification is fact-intensive and varies depending on the type of claim asserted by the plaintiffs, gig economy employers will find the Razak opinion helpful in structuring their independent contractor relationships.

For the full article, click here.

Susan K. Lessack