Options For Calif. Franchisors After New Contractor Standards

Law360 (October 9, 2019, 12:05 PM EDT) -- Last year, the California Supreme Court adopted a new test for distinguishing independent contractors from employees. In Dynamex Operations West Inc. v. Superior Court of Los Angeles,[1] the court took the so-called ABC test from Massachusetts, which requires that a putative employer must meet three factors to establish an independent contractor relationship. 

The B prong requires the putative employer to show that the alleged employee is not in the same business. This is problematic for franchise relationships where franchisees are licensed to engage in the same business. Some courts subsequently recognized the unique nature of franchise relationships in considering the ABC test, but the...

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