The California legislature did not act this year to delay or change the Supreme Court decision in Dynamex, which laid out three criteria for a worker to be considered an independent contractor and not an employee. This decision makes it virtually impossible for most businesses to continue to classify workers as independent contractors.
This will likely be seen in Workers Compensation audits as current policies expire. Auditors and underwriters will be seeking to include money paid to independent contractors as payroll unless the insured employer can prove these workers meet the three requirements of the court decision.
The Supreme Court determined that to qualify as an Independent Contractor the employer must prove all of the following:
That the worker is free from the control & direction of the hirer in the performance of the work; and
That the worker performs work outside the usual course of the hiring entity’s business; and
That the worker is customarily engaged in an independently-established trade, occupation or business of the same nature as the work being performed for the hiring entity.
If you have a lot of workers classified as Independent Contractors, you could be facing large additional premiums on your current and expiring policies as auditors will be applying these criteria.