Are you classifying the people who work for you properly? I work with lots of entrepreneurs and small business owners, and I'm struck by how often people assume that just calling someone an independent contractor is enough to make that the case.

It's especially common with small independent films and theatre projects. Producers often include provisions in their contracts stating that the work is being performed by an independent contractor, who agrees to take responsibility for all taxes, workers' compensation, and other obligations.

But wishing it, or even contracting it won't make it so.

In 2012, shortly after California legislated some harsh penalties for misclassification of workers, I wrote about the so-called “Control test” which examines the degree of control the employer has over the worker in a number of areas.

Independent Contractor vs. Employee – misclassification can cost entertainment industry employers dearly.

New Supreme Court Ruling

But earlier this week, that changed. On April 30, 2018, California Supreme Court rendered its decision in Dynamex Operations West, Inc. v. Superior Court, and clarified the standard for determining whether workers should be classified as employees or independent contractors. The Court held that there is a presumption in favor of treating workers as employees, and that an independent contractor classification places a burden on the company to establish that it is proper under the so-called “ABC test”, which has been adopted in some other jurisdictions.

The ABC Test

Continue Reading