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ABC test

The ABC test is utilized in several jurisdictions (e.g., California, Massachusetts, New Jersey) to distinguish employees from independent contractors.

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The ABC test has three prongs. A worker is properly considered an independent contractor, to whom a wage order does not apply, only if the hiring entity establishes each of the following. (1) That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work. (2) That the worker performs work that is outside the usual course of the hiring entity's business. (3) That 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. The ABC test makes it relatively challenging for companies to properly classify workers as independent contractors, as they must meet all three of the criteria. As such, jurisdictions utilizing the ABC test are seen as favorable for plaintiff lawyers suing on behalf of workers.

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