The California Supreme Court issued a ruling[opinion, PDF] Monday making it more difficult for employers to classify their employees as independent contractors.
In order for an employee to be classified as an independent contractor, the court ruled that the employer must show three things. First, the employer must show that the employee is not under the “control and direction” of the employer. Second, the employer must show that the employee performs “work that is outside the usual course of the hiring entity’s business.” Third, the employer must show that the worker is “customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.” For example, someone who is considered an independent contractor would be working “in his or her own independent business.”
The case itself was a suit against Dynamex Operations West, Inc., a “nationwide same-day courier and delivery service.” In 2004, Dynamex changed the way it classified its workers, classifying them as independent contractors rather than employees in order to save money. This ruling did not solve that particular case, but defined the term “independent contractor” as well as laid out a test for future determinations for the lower courts.