Employer classification of employees using the “ABC” test may apply retroactively for wage purposes with some exceptions, including some within the dental industry, the California Supreme Court ruled in mid-January.
The ruling means employers will use the stricter standard known as the “ABC” test to determine worker classification regarding independent contractors and employees. Dental practices, however, may continue to use the Borello test to classify dentists and the “ABC” test to review non-dentist staff, an exemption for which the California Dental Association advocated.
While the requirement took effect at the beginning of last year following legislation signed by Gov. Gavin Newsom, it was unclear if it applied retroactively to pending wage claims.
The Borello test creates greater flexibility for dental practices on whether to classify a dentist as employee or independent contractor.
An employment relationship, by standard definition, is established as the worker is integrated and spends more time with the company. So, even with the greater flexibility of the exemption, the definition can quickly make it apparent that there’s an employment relationship instead of the alternative.
Dental offices can begin to review current and future non-dentist staff using the “ABC” test. They should also practice caution on certain classifications that once fell under 1099 workers, for instance.
The “ABC” test makes the presumption that a worker is an employee unless three conditions are all met. The worker will be classified as an employee unless the worker is:
- Hired to perform work that’s outside the normal business operations.
- Free from supervision of the hiring entity as it relates to the work that’s performed.
- Is in an independently established line of work of the same nature as what is being performed.
The case that brought on the change is Dynamex Operations West Inc. v. Superior Court of Los Angeles. The exemption also impacts other professional fields outside dentistry.