Posted on March 12th, 2019
Below is a complete transcription of this video.
Greetings, fellow entrepreneurs.
Today, I’ll be talking about what is an independent contractor in California?
The short answer is almost nothing. But let me get into it.
Previous to about April 2018, when a case called Dynamex versus Superior Court came out, typically set California used the same test basically that the IRS used.
Now the Dynamex case has changed that completely. Now it’s made it that much harder to even claim or to have an independent contractor not just to claim that someone’s an independent contractor but to have an independent contractor.
What Dynamex says is that everyone’s presumed to be an employee unless the company can prove what they call the ABC test, right?
A, would be where they free of control and outside direction.
Okay. B, do they perform work that’s outside the usual course of the hiring entities business?
C is, is the work being done by the independent contractor customarily, or is the independent contractor customarily engaged in an established trade or occupation?
What this case essentially did was making it almost impossible to be an independent contractor.
The prong that hurts the most is the B prong, which indicates that they have to perform work outside the normal course of the company’s business.
For example, as a lawyer, if I had a case, and I hired another lawyer that has his own law firm, has his own cases, has his own clients and I were to go to him and say, “Hey, can you do this particular work for me on this particular case because you’re the expert in this, and am not?”
Just for this one little particular thing, well, the way I read the case that says that he’s my employee now even though he’s free from my controller direction and that he’s engaged in a business that’s customarily done by independent contractors.
Well, now because of prong B because I’m a law firm doing legal work and for me, he’s doing legal work that would make him an independent contractor from the way I read the case.
It’s unfortunate but here we go again, California’s screwing it up.
Thanks, everybody. Till next time.
