What is the Difference Between an Employee and an Independent Contractor in California?

At Romero Law, our employment law attorney in Pasadena, California knows how important it is for businesses to have access to independent contractors when their workload grows beyond their employees’ capabilities. They provide an exceptional short-term remedy to adding extra help, without hiring new, permanent employees and assuming the burdens of California and federal employment laws.

However, employers cannot designate an individual as an independent contractor, without satisfying the legal requirements necessary to do so.

Here is what our Los Angeles County residents need to know about the differences between being an employee and an independent contractor in California.

Independent Contractors are Defined By the ABC Test in California

Because of the wide variation between employees and independent contractors, Assembly Bill 5 passed throughout California in 2019 making it illegal to misclassify an employee to avoid paying benefits or wages, significantly curtailing an employer’s ability to do so.

With the new law came a presumption of employment, or ABC test, as outlined by the California Labor and Workforce Development Agency, which requires three factors to be true when distinguishing between employees and independent contractors.

Under the ABC test, an individual is presumed to be an employee, unless the hiring company can prove that the worker:

  • Performs work that is outside the usual course of the hiring entity’s business
  • Is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed
  • Is free from the company’s direction or control while performing their duties

Failure to satisfy each of the three elements will result in an individual being classified as an employee.

Are You An Employee or Independent Contractor in California?

The ABC test is definitive and can help most people determine the difference between being an independent contractor and an employee.

To simplify the legal requirements, workers can ask themselves a few simple questions to determine their status.

You are probably an employee if:

  • You work full-time for the company
  • You are paid by the hour
  • You receive employee benefits
  • You received training from the company
  • The services you provide are an integral part of the company’s business
  • The company closely supervises you
  • Your company provides the tools and equipment needed to work
  • You are permanent

You are probably an independent contractor if:

  • You operate a truly independent business
  • You work for more than one company at a time
  • You set your own working hours
  • You are paid by the project
  • You provide the tools and equipment needed to do your job
  • You hire and pay your own assistants
  • You pay your own business and travel expenses
  • You can earn a profit or suffer a loss because of your work for the company

Not all employees or independent contractors check each of these boxes and may only need to identify with a few examples to be considered one or the other. If you believe you are being misclassified as an independent contractor — when you are actually an employee — we can help you satisfy the elements that prove that is true, starting with a free consultation.

Contact Our Skilled Los Angeles Employment Law Attorneys Today

At Romero Law, APC, our experienced Pasadena employment law attorneys take a hands-on approach to pursuing actual results our clients can count on, because we are more than just their lawyer, but their advocate.

Our bilingual law firm staff offers services in both English and Spanish and is available now to discuss your case during a free consultation by calling 626-396-9900 or contacting us online.

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