A test that is utilized in several jurisdictions (e.g., California,
Massachusetts, New Jersey) to distinguish employees from independent
contractors. 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.
- 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 and in fact
- That the worker performs work that is outside the usual course of the
hiring entity's business
- 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 each of
the criteria. As such, jurisdictions utilizing the ABC test are seen as
favorable for plaintiff lawyers suing on behalf of workers.