A new California Supreme Court decision has strengthened the distinctions between independent contractor and employee. In Dynamex Operations West, Inc. v. Superior Court, the court concluded that the hiring entity must establish whether a worker is an independent contractor using the “ABC test,” according to wagehourblog.com. This standard assumes all workers qualify as employees unless they fall under the three requirements of the ABC test. The test requires employers to establish that independent contractors are not under the control of the employer, perform work that is outside the usual business of the employer, and are typically engaged in an independent trade or business of the same nature as the work performed. This is much stricter definition than the IRS 20 factor test that’s been applied in the past.
According to stylistnewspapers.com, this may have a significant effect on booth rental salons in the state. Because booth rental salons employ stylists and nail technicians to perform the primary work of the hiring business, booth renters may no longer be considered independent contractors. Although some booth rental salons may still qualify as independent contractors under a narrow set of circumstances, the vast majority of salons will no longer be able to avoid state employee and wage laws by claiming independent contractor status for their workers.