The IWC’s Work Orders adopt a three-prong definition of employment, including (a) exercising control over the wages, hours or working conditions, or (b) suffering or permitting to work, or (c) engaging, thereby creating a common law employment relationship.  This decision holds that for purposes of determining whether a worker is an employee entitled to protections of those Work Orders at least the last two of the prongs apply even outside the joint employer context.  However, the suffer or permit to work prong is not applied literally to encompass all individuals who perform any work for an employer, but nevertheless is applied broadly to encompass every individual who can reasonably be viewed as working in the employer’s business.  Rejecting a multifactor “economic reality” test of “suffer or permit to work,” this decision adopts instead the three-factor ABC test under which a worker is treated as an independent contractor only if (a) 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 the work and in fact; and (b) the worker performs work that is  outside the usual course of the hiring entity’s business; and (c) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.  The hiring entity bears the burden of establishing that each prong of the ABC test is satisfied.

California Supreme Court (Cantil-Sakauye, C.J.); April 30, 2018; 2018 Cal. LEXIS 3152