[W]e conclude that in determining whether, under the suffer or permit to work definition, a worker is properly considered the type of independent contractor to whom the wage order does not apply, it is appropriate to look to a standard, commonly referred to as the “ABC” test, that is utilized in other jurisdictions in a variety of contexts to distinguish employees from independent contractors. Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such 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 for the hiring entity.
The reason this is important has to do with the benefits, beside direct income, that are available to the worker. For most of our work with telecommuting development we focused on the process of converting existing employees into successful telecommuters. In all those cases I argued that the telecommuters should be compensated the same as their non-telecommuting coworkers.
[Note, 2 May 2018: further review of these findings of the California Supreme Court reveal that the decision primarily concerned low paid employees/contractors and the minimum wage. It did not touch on fringe benefits. The following commentary is broader than that. I expect further court decisions will evolve in the direction of the commentary.]
Sometimes the telecommuters’ employers argued that they should be paid less because they didn’t have the travel expenses of the commuters. I countered with the fact that the telecommuters were usually significantly more productive than the regular commuters and reduced the need for office space, among other benefits. Why pay better employees less their colleagues?
Now add the further dodge of calling telecommuters (and more distant teleworkers) independent contractors. That could let the employer off the hook for Social Security, health care insurance, retirement and other benefits, no? That typically amounts to more than 20% of the worker’s salary. A substantial saving.
That argument won’t work if the employer is in California, it seems. The bottom line is this. If you
- work a regular full- or almost full-time schedule for an employer who
- determines what you do and pretty much how you do it, and
- you don’t work for anyone else doing the same job, then
- you’re an employee, deserving of all the benefits paid to other employees.
Otherwise you’re probably a contractor and are responsible for developing those benefits for yourself. Don’t forget to charge at least 20% more than your office-bound coevals.
At least if you live in California.