Independent Contractors in California

The characterization of workers as "independent contractors" can be tempting for employers: no workers' compensation coverage, no benefit plans, etc. Some workers may like being independent contractors too because they receive payment withhout tax withholdings. The government, on the other hand, is not a fan.

The California Court of Appeal in JKH Enterprises, Inc. v. Department of Indus. Relations decided that a group of delivery messengers were wrongly classified as independent contractors rather than employees. The court brushed aside evidence that the employer, JKH, did not control the messengers' means or methods of performing the work. The court noted that when the job does not require specialized skills, the employee's autonomy is not as important. Rather, the court focused on the messengers' hourly rate of pay (rather than payment by the job), and the fact that the alleged contractors were performing the job essential to the business' purpose. (That is, JKH was a delivery service, and it classified those responsible for accomplishing that business purpose as contractors).

Interestingly, the court also decided that when independent contractor status is evaluated in the context of whether the employer should have provided workers' compensation insurance, the court must evaluate the case differently than when the case is brought in another context.

DGV