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Employment Status

Dynamex Operations West, Inc. v. Superior Court

          On Monday, April 30, 2018, the California Supreme Court radically modified the test for determining whether an individual will be considered an employee or an independent contractor for purposes of employment rights and state income taxation. For the moment, the California case will have no immediate impact in Washington. However, reportedly the Washington legislature is considering an amendment to Washington law that would be in line with the California decision.

          The criteria for establishing employment status set forth in the California case, Dynamex Operations West, Inc. v. Superior Court (Sup. Ct. Case No. S222732, Apr. 30, 2018), is as follows:

(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‚Äôs 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.

          While the criteria set forth in elements A and C generally continue familiar tests for employment status, element B undoubtedly presents a new hurdle for employers and will likely lead to litigation in the building and tech sectors if or when Washington law decides to follow California. It should also be noted that Massachusetts and New Jersey have already adopted the A, B, C test for determining employment status.