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August, 2018
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California Supreme Court Update
The California Supreme Court recently adopted the "ABC" Test to determine whether a person is an employee versus an independent contractor.
Area of Law:  Employment Law 

General Background:   The classification of an individual performing services for an operating company has long been an area of ambiguity and contention.  Oftentimes, an employer may want to classify a new hire as an independent contractor.  Oftentimes, an employee may want to be classified as an independent contractor.  The critical hot buttons at issue with the classification are tax withholdings, tax deductions, eligibility for overtime, meal breaks, rest breaks and qualification for benefits.   

The ABCs of the Dynamex decision:  What you need to know.   Only lawyers really love the procedural history, so we'll skip that.  Here's what you need to know.  The California Supreme Court adopted the ABC test to determine whether an employee is an independent contractor.  As the Court wrote:  "Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes:
  • (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’s 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" 
Applying the ABC Test:   The burden of proof is on the employer (i.e. the "hiring entity").   That means, if the classification is challenged, then the courts will start with the presumption that the individual at issue is an employee, and the employer will have to prove that the relationship passes the ABC test.  Prongs "A" and "C" of the test can usually be satisfied with some planning and controls.  However, we believe that "B" will prove to be very challenging for many companies or independent contractors.

How Do You Manage the Risk?:   Business and life is about risks, mitigating risks and managing risks.  Litigation arising from misclassification is one of those risks.  The first approach a company (or contractor) can take is to set up the work relationship as an employer-employee relationship.  The second approach would be to set up the relationship as an independent contractor relationship after running through the test with your legal counsel, and with full appreciation of the risks of misclassification in financial terms.   The third approach is to search for insurance to cover this risk.  At the present time, we are not aware of any, but new products are being created all the time, so we recommend that employers revisit this issue with their insurance brokers periodically.
 

How to Refer a Prospective Client to Adishian Law Group

Who are our clients?  Our clients include
(1) highly compensated executives and professionals;
(2) businesses and owners/founders of businesses with revenues of $10M to $200M and
(3) clients active in commercial real estate.
Like all professional service businesses, many of our best clients come from referrals.  The following videos on the Adishian Law Group YouTube Channel show Chris talking about Who We Represent? and What Makes Us Unique?

How to make a referral?  The best way to introduce a referral is to send an email copied to the referral and our firm, including phone numbers.  Another way is to call us directly with the prospective client’s phone number or email to let us know that he or she will be calling.  A third way is to provide our phone number or email to the prospective client, and for them to remember to tell us that you referred them. The following video on the Adishian Law Group YouTube Channel discusses How to Start a Relationship with Adishian Law Group?

What your referral can expect?  We offer a free consultation directly with an attorney, which can be in person, via telephone or video conference. We aim to have these meetings within 24 hours of contact. All information shared will be treated confidentially to the fullest extent of the law whether or not we are able to represent the prospective client in the legal matter.   Whether or not we can represent your referral, we will do our best to provide information, resources or other referrals.  Law is a Helping Profession.


We encourage you to connect with us via the Social Media Buttons below, and visit the Adishian Law Group YouTube Channel.  We now have 40 videos on our YouTube channel, with more to come!  As always, thank you for your ongoing support.  

--Adishian Law Group, P.C.
About Adishian Law Group, P.C.   Adishian Law Group,  (http://www.AdishianLaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law and Real Estate law.   As of December 2017, Adishian Law Group, P.C. has represented business and individual clients located across 22 California counties, 13 States outside of California and 10 foreign countries --- in over 590 legal matters.  Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet.  The firm serves its clientele from its headquarters in El Segundo, with offices in Palo Alto and San Francisco.
For more information about this topic or to contact Adishian Law:
 
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