The Dynamex Case, EDD and What the New Rules Mean for Your Independent Contractors

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The California Supreme Court recently heard a case that is changing the rules on the classification of Independent Contractors in the state of California.  Previously, there were 13 factors that EDD would look at in assessing whether a worker was a contractor or an employee.  In October of 2018 that changed when the Dynamex case was decided by the California Supreme Court.  The classification of contractors now rests on three factors and the default is now that workers are employees.

The three factors of the new laws that EDD will be using to classify workers are:

  • The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  • The worker performs tasks that are outside of the usual course of the hiring entity’s business.
  • The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

If you have concerns around your classifications or, if EDD has contacted you about an investigation, contact the team at Milikowsky Tax Law today.


The penalties for misclassifying workers can be steep and EDD can retroactively charge your company for payroll taxes dating back 3 years. Additionally, Worker’s compensation may not have been paid.  Be certain, be prepared and reach out to Milikowsky Tax Law today.

The information contained on our website and in blogs is provided for information purposes only and does not constitute legal advice.