California’s manner and means test is a test that determines whether a worker is an independent contractor or an employee – and that’s important, because contractors and employees are entitled to different protections when it comes to pay, benefits, and even discrimination and harassment in the workplace. Only some people are subject to the manner and means test; other workers are subject to other methods of determining whether they’re contractors or employees.
This guide outlines who’s subject to California’s manner and means test.
Who is Subject to California’s Manner and Means Test?
The manner and means test, sometimes called the Borello test (named for the court decision that first established it), attempts to distinguish whether a worker is a contractor or an employee. It does so based on whether an employment relationship exists between the two parties. An employment relationship may exist when one entity hires someone to do something that benefits them or another party. The hiring entity can be a person, an organization, a business, or a government agency or body. For example, a company may choose to hire a freelance web designer to create its website, which may establish an employment relationship. The same may be true if a marketing agency who works with the company were to hire the freelance web designer.
But an employment relationship can be tricky, so the state of California uses the manner and means test to determine whether the business has the right to control the manner and means of accomplishing the desired result. That’s what really determines whether there’s an actual employment relationship between the parties.
People in some professions are subject to the manner and means test, including:
- Some insurance professionals. Certain workers who have to be licensed by the Department of Insurance are subject to the manner and means test, such as licensed insurance agents, brokers, people who perform risk management or loss control work for insurance companies, auditors, and those who provide underwriting inspections.
- Some medical professionals, such as physicians and surgeons, podiatrists, dentists, psychologists and veterinarians.
- Some licensed professionals, such as attorneys, architects, engineers, accountants, private investigators, and landscapers.
- Some securities workers, such as those who are registered with the Securities and Exchange Commission, those who are registered with the Financial Industry Regulatory Authority, or those who are licensed by California to advise in the investment of securities or to sell securities.
- Some professional service providers, which we cover in the following section.
Professional Service Providers
Some people who provide professional services under a contract may be subject to the manner and means test. In order for the manner and means test to apply, these conditions must be met:
- The worker has a business location separate from the hiring entity’s business location. The worker’s business location may be their home, an office, or another place, as long as it is separate from the hiring entity’s business location.
- The worker has required business licenses or tax registrations (but only if the work is performed in a jurisdiction that requires them).
- The worker has the ability to set their own rates for the services performed.
- The worker has the ability to set their own hours. Deadlines don’t count; the employing entity can create deadlines that the worker must meet.
- The worker is customarily engaged in the same type of work performed under contract with one or more other hiring entities, or must hold themselves out to be available to other potential hiring entities to perform the same type of work.
- The worker customarily and regularly exercises discretion and independent judgment in the performance of their services.
Do You Need to Talk to an Attorney About the Manner and Means Test?
If you fall into one of these categories – or if you believe you do – and you have an issue that requires protection under California law (such as unpaid wages, overtime benefits or discrimination issues), we may be able to help. Call our office at 818-230-8380 or fill out the form below to schedule your free consultation now.