The California Supreme Court made a ruling in a case in which workers for Dynamex sued after they were converted from employees to independent contractors. The conversion took place in 2004, but workers say that the company exerted control over their work, what they wore at work and their pay rates. In making its decision, the court used the "ABC test" to determine if a worker is an employee or independent contractor.
To qualify as an independent contractor, the worker must provide services that are outside of a company's core offerings. For instance, an electrician providing services at a paper company would likely be an independent contractor. That person would also need to provide services to other companies and do so free from a company's control. The court's ruling could make it difficult for businesses such as Uber to claim that their workers are independent contractors.
This is the opinion of the deputy director of the National Employment Law Project. It is important to note that the court's decision only impacts workers in California and does not change the federal definition of contractor for tax purposes. However, it is still an important one because workers who are wrongly classified as independent contractors aren't entitled to a minimum wage or other benefits.
Companies who incorrectly classify their workers could be in violation of federal or state employment laws. An attorney may be able to help an individual determine if he or she should have been an employee instead of a contractor. This may be done by reviewing the amount of control a company had over that person. If a person is incorrectly classified as a contractor, compensation for unpaid overtime could be sought from the employer. Other types of compensation may also be awarded.