Examining the Dynamex ‘ABC Test’ by Various On-Demand Worker Types

 

From JDSuipra, , Sean Kingston looks at the recent Dynamex decision in California and applies the new standard to drivers, IT workers and freelancers.  Sean writes:

IT Workers

Our second group, Information Technology workers, provides a clearer analysis. However, just as with delivery drivers, great variability exists in the nature of the relationship between worker and business. For example, the IT consultant who markets information security services to multiple businesses is almost certainly going to meet all three prongs. However, the IT worker who markets general IT services but whose work is a mixture of one-off projects and long-term engagement is not as clearly going to fall into the Prong B definition, especially where other IT staff are employed by the contracting business.

Freelancers, Generally

What about the freelancing professional? A professional such as an accountant, management consultant, or a doctor looking to take on gigs with multiple companies may look to a staffing agency, an association, or a platform marketplace for a wide variety of freelancing professionals. Freelancing doctors who take gigs at medical clinics or hospitals would seem to be working right into Prong B. However, those doctors who utilize an app-based platform marketplace that brings together a highly varied group of professionals and customers would appear to satisfy the test. What is the usual course of business of an online marketplace? Could the freelancing professional be deemed an employee of the online marketplace?

Is there any distinction for freelancers who offer non-professional services, such as running errands, packing boxes, or preparing mailers? It likely comes down to the form of the hiring entity and its relationship with the ultimate users of the freelancer’s services. If the very nature of the company is to provide labor for a discrete set of customers with formal agreements regarding the same, Prong B would appear to favor a finding that the worker is providing services in the usual course of the company’s business. However, if the platform merely operates as a marketplace, where both workers and those requiring the services interact with the app to meet their respective needs, the platform entity is in a better position to argue satisfaction of all three prongs.

Conclusion

While the Dynamex decision is certainly going to make it much more difficult to establish independent contractor status, specific factual nuances—whether in the nature of the work being performed, in the nature of the relationship between the worker and the hiring entity, or in the identity of the ultimate customer—will assist in clarifying the court’s decision. All companies in California who utilize independent contractors should look to understand the nature of their relationships with those workers, and assess both the reasons for the use of independent contractors and the financial impacts of potential misclassification issues.

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