We are always trying to help small business owners with the latest news and law updates to help you run things as smoothly as possible.

Recently the Employment Development Department for the State of California released something very helpful to business owners – a checklist of how to identify who is truly an independent contractor and who is an employee for your business. 

They stated that the California Supreme Court adopted the “ABC test” to help employers and small business owners understand the difference. 

This is the ABC test taken from the court:

An independent contractor must have all three following requirements:

A. The individual 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. The individual performs work that is outside the usual course of the hiring entity’s business. 

C. The individual is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

If the individual does not meet ALL 3 requirements, they are not an independent contractor and are, in fact, and employee.