A recent opinion by the California Supreme Court applied what media outlets were described as a new legal test that employers will have to use when determining whether their workers are truly employees or independent contractors. Under this new test, which only applies when it comes to wage and hour violations, an employer who wants to classify a worker as an independent contractor has to establish that its worker is, legally and in practice, free to determine how to do his or her work. The employer can only be concerned with the end result.
Moreover, the employer will have to show that the worker is doing something that is not the same as the business in which the employer is engaging. Finally, the independent contractor has to be in the habit of performing his or her trade for other customers.
By way of example, a fast food employer could probably still hire an outside plumber, even regularly, to fix the employer's pipes, and can do so without having to worry about treating the plumber as an employee. On the other hand, the same employer could probably not have independent contractors cooking them under the court's recent ruling.
If an employer cannot establish any one of these three prongs of the court's new test, the employer should treat its worker as an employee. As such, the employee must be paid according to California law and must otherwise receive the benefits of California's wage and hour laws. An independent contractor, on the other hand, enjoys no guarantee of such protections.
The press has indicated that this new relatively new ruling is going to make it more difficult for employers to get around wage laws by calling their workers independent contractors rather than employees. Misclassification of workers is indeed an ongoing problem in this state, and those Los Angeles residents who feel they have been the victim of such practices have legal options.