However on April 30, 2018, the California Supreme Court adopted an expansive definition of “employee” and rejected the Borello test for determining whether workers should be classified as either employees or independent contractors for the purposes of the wage orders adopted by California’s Industrial Welfare Commission (“IWC”) in favor of a worker-friendly standard that may upend the existing independent contractor labor market.
Under the new so called ABC test, a worker will be deemed to have been “suffered or permitted to work,” and thus, an employee for wage order purposes, unless the employer proves:
(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;
(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.
Each of these requirements need to be met in order for the presumption that a worker is an employee to be rebutted, and for a court to recognize that a worker has been properly classified as an independent contractor.
This new test will likely result in many “independent contractors” in the entertainment industry being reclassified as employees.
In addition, under existing California Labor Code section 3351.5(c), if a service contract has “work made for hire” language, the worker is deemed to be an employee, and almost all contracts in the industry have this kind of language vesting ownership in the employer.