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Originally posted in the Daily Journal.

The California Supreme Court recently made a sweeping change to California’s gig economy. In Dynamex Operations West, Inc. v. Superior Court, the Supreme Court ruled that in deciding whether a worker is an employee or an independent contractor, the employer must begin by presuming that the worker is an employee or an independent contractor, the employer must begin by presuming that the worker is a common law employee.

Although the Dynamex ruling is limited to classifying workers under California’s wage orders, its practical effect will be much broader. Employers commonly use one definition of employee for wages, hours and working conditions, including employee benefit plan eligibility. The impact of the Dynamex decision on employee benefit plans that are subject to the Employee Retirement Income Security Act of 1974 is an open question. It will turn on the language found in each of those plans.

Click here to read on about the impact of the decision on employee benefit plans.