It is the second "B" prong of the test that has received the most attention from commentators, and has challenged employers doing business in California to determine how to grapple with the seismic change to the categorization of workers. The new law will fundamentally alter how courts approach a worker’s classification, since under the new test, a worker whose job responsibilities fall within the “usual course of business” of the employer may, depending on the circumstances, be re-classified as an “employee.” Courts have not yet determined how broadly or narrowly the “usual course of business” element will be defined. If the worker is re-classified, companies would have to account for workers' compensation, unemployment insurance, and social security taxes, and for some employees a host of wage-related issues, including overtime, meal and rest periods.
With the law going into effect in the new year, companies that partner with workers currently classified as “independent contractors” should consult with their employment attorneys or advisors to evaluate how best to determine whether the new law applies to those independent contractors, and if so, to ensure compliance with the new law.