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AB5 and Dynamex and Borello, Oh My!

Whether a worker is correctly classified as an employee versus an independent contractor does not depend on whether he is paid with a Form W2 or 1099. “The label placed by the parties on their relationship is not dispositive, and subterfuges are not countenanced.” S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989). Rather, it is a fact specific inquiry based on the conduct of the parties. When the existence of employee status is disputed, the law requires certain factors to be met which will dictate one way or another whether a worker is an employee or an independent contractor, these are often referred to as the Borello factors. On April 30, 2018, the California Supreme Court issued a decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (2018) which created a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits. California has recently codified the decision in Dynamex into the California Labor Code effective January 1, 2020. However, multiple exemptions exist in which a presumption of employee status does not exist and the Borello factors should be used instead.

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