In 2019, California lawmakers passed several laws that expanded and protected worker’s rights. One of those was Assembly Bill 5 (AB5), commonly referred to as the “gig-worker law.” AB5 strictly enforces a test that differentiates between independent contractors and employees.
This new law requires employers to use this test – the ABC test – when classifying their employees. However, it is also critical for workers to understand the details of the test and what it means for their own classification.
What is the ABC test?
There are three elements to the ABC test which determine if a worker is an independent contractor or not. They include:
- Control: The hiring party does not have direct control over the worker’s behavior or finances. The contract between the worker and the hiring party outlines the relationship and the work to be done, but the hiring party does not directly supervise or direct the worker as they would any other employees under their management.
- Work: The work completed by the worker falls outside the normal work of the hiring party’s business. Essentially, the worker does not perform duties similar to what the employees of the business already do.
- Trade: The worker is only an independent contractor if they are involved in an independent business in the same trade. The best example of this includes several types of licensed professionals, such as construction contractors.
A worker must meet all three of these factors for an employer to classify them as an independent contractor. If they do not meet even one factor of this test, then they are an employee by default.
It is up to the employer to prove workers are independent contractors. And this test makes it harder for employers to misclassify workers who should be employees – and receive all of the benefits that employees do.
However, being aware of how the ABC test works and how employers must use it will help you better protect your rights.