The California Supreme Court’s adoption of a strict ABC test for purposes of the wage orders is likely to cause significant problems for California businesses that use independent contractors. Of particular concern is the “B” prong of the test and the contours of the putative employer’s business. While at present the ABC test applies only to the wage orders, which means that only non-exempt employees are subject, businesses may find it difficult to implement the ABC test without implicating other aspects of the relationship, such as taxes or workers’ compensation, such that conversion for all purposes may be necessary. Nonetheless, there are many unresolved issues, and it remains to be seen how adoption of the ABC test will play out in California.

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