Remember Rick Astley? Yes, this guy. And this song. I assume he had other songs but I know of none of them.

I recently read a Reddit post that offers the Astley Paradox. And it’s a good one.

If you ask Rick Astley for his copy of the movie Up, he cannot give it you as he will never give you up. However, in doing so, he lets you down. Thus creating the Astley Paradox.

California’s tests for determining independent contractor status are not paradoxical, But they are complicated.

There are essentially two tests, the ABC Test and the S.G. Borello Test. The ABC Test is the default test, and it’s the hardest to please.

There are a gazillion exceptions to the ABC Test, and you can find these in California Labor Code sections 2776-2784. But when an exception applies, it doesn’t mean the worker is an independent contractor. It means you use the S.G. Borello test to make that determination instead of the ABC Test.

The S.G. Borello Test is a balancing test. In contrast to the ABC Test, you don’t have to satisfy every factor.

Here’s the S.G. Borello test, with some bonus commentary from the California Department of Industrial Relations:

The California Supreme Court established the Borello test in S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations (1989) 48 Cal.3d 341. The test relies upon multiple factors to make that determination, including whether the potential employer has all necessary control over the manner and means of accomplishing the result desired, although such control need not be direct, actually exercised or detailed. This factor, which is not dispositive, must be considered along with other factors, which include:

1. Whether the worker performing services holds themselves out as being engaged in an occupation or business distinct from that of the employer;
2. Whether the work is a regular or integral part of the employer’s business;
3. Whether the employer or the worker supplies the instrumentalities, tools, and the place for the worker doing the work;
4. Whether the worker has invested in the business, such as in the equipment or materials required by their task;
5. Whether the service provided requires a special skill;
6. The kind of occupation, and whether the work is usually done under the direction of the employer or by a specialist without supervision;
7. The worker’s opportunity for profit or loss depending on their managerial skill;
8. The length of time for which the services are to be performed;
9. The degree of permanence of the working relationship;
10. The method of payment, whether by time or by the job; 
11. Whether the worker hires their own employees;
12. Whether the employer has a right to fire at will or whether a termination gives rise to an action for breach of contract; and
13. Whether or not the worker and the potential employer believe they are creating an employer-employee relationship (this may be relevant, but the legal determination of employment status is not based on whether the parties believe they have an employer-employee relationship). 

Borello is referred to as a “multifactor” test because it requires consideration of all potentially relevant facts – no single factor controls the determination. Courts have emphasized different factors in the multifactor test depending on the circumstances. For example, where the employer does not control the work details, an employer-employee relationship may be found if (1) the employer retains control over the operation as a whole, (2) the worker’s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary. (Yellow Cab Cooperative, Inc. v. Workers’ Compensation Appeals Board (1991) 226 Cal.App.3d 1288.) 
As the Supreme Court has explained, Borello “emphasizes statutory purpose as the touchstone for deciding whether a particular category of workers should be considered employees rather than independent contractors for purposes of social welfare legislation.” (Dynamex, 4 Cal.5th at 935.) The emphasis on statutory purpose “sets apart the Borello test for distinguishing employees from independent contractors from the [common law] standard . . . in which the control of details factor is given considerable weight.” (Id.)

Most contractor relationships won’t satisfy all of the factors, but you’re going to need to satisfy most if you want independent contractor status under the S.G. Borello test. There’s no precise mathematical formula for how many factors you need, and different judges may evaluate the same set of facts differently, so it’s important to satisfy as many factors as you can.

California law isn’t as forgiving as Rick Astley. California law will often let you down and desert you.

© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.