Employee Unless Proven Otherwise
There has been a lot of talk, and concern, about the Dynamex holding which states that a worker is presumed an employee unless otherwise proven by the hiring entity (the employer). In order to meet this burden the ABC test is utilized. The ABC test requires that ALL three factors as follows are established. A) that 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; AND B) that the worker performs work that is outside the usual course of the hiring entity's business; AND C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Unless the hiring entity can prove all THREE elements of the ABC test the worker will be deemed an employee. One that is entitled to overtime, meal breaks, rest breaks, unemployment...and so on. The court justified the ABC test stating "misclassification of workers as independent contractors rather than employees is a very serious problem, depriving federal and state governments of billions of dollars in tax revenue and millions of workers of the labor law protections to which they are entitled."
This test will affect a good number of businesses that are reliant on a system that utilizes independent contractors. The court addresses the prong which I believe will be the one that proves most difficult for most employer - B with illustrations which I believe will make it almost impossible for any business owner to use an independent contractor on a regular basis. The court cites a business that was a timber management company whose business operation involved CONTRACTING for the purchase and harvesting of trees and the sale and delivery of the cut timber to customers. It was held that a worker who actually harvested the timber was NOT an independent contractor but instead an employee because the harvesting work was not "merely incidental" to the company's business but rather was an integral part of that business (Dynamex at 821).
The good news is that A. L. Harvey Law can help. Contact us today to assist you in restructuring your business to convert your independent contractors as w2 employees.