California PT OT and STs – the California Supreme Court issued a decision April 30th which results in new legal standard for determining whether a worker is an independent contractor or an employee. This is a major development in California employment law that will cause many workers now classified as independent contractors to be considered employees in the eyes of the state.
Under the Court’s new “ABC” test, a worker is presumptively considered an employee under the California Wage Orders unless the employer can establish all of the following three elements:
- The worker is free from the direction and control of the person who hires him/her in connection with the performance of the work, both under the contract for the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business
- 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.
Now is the time for practice owners to look carefully at the nature of your relationship with therapists who work for you – misclassification falls on your shoulders, and I can tell you first hand that Labor and IRS Department audits are not fun, and misclassifications can be very costly in terms of interest and penalties.