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The law further states that independent contractor status is evidenced if the worker: (1) has a substantial investment in the business other than personal services, (2) purports to be in business for himself or herself, (3) receives compensation by project rather than by time, (4) has control over the time and place
AB 5 requires the application of the ABC test to determine if workers in California are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission (IWC) wage orders.
The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.
A new city ordinance in Los Angeles will take effect on July 1, 2023, which requires a written contract for many independent contractors and freelance workers who work in the city. This ordinance, known as the Freelance Worker Protection Ordinance, is similar to requirements in New York City, Minneapolis, and Seattle.
Traditionally, independent contractors in California have the rights to decide when and where they work, set their own fees, have multiple clients, have their own tools/materials, provide skills or expertise that is not part of a companys usual repertoire, etc.
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Certain factors will define a worker as an independent contractor in every case: not relying on the business as the sole source of income, working at his or her pace as defined by an agreement, being ineligible for employer provided benefits and retaining a degree of control and independence.
Pay basis: If you pay a worker on an hourly, weekly, or monthly basis, the IRS will consider it a sign the worker is your employee. An independent is generally paid by the job, project, assignment, etc., or receives a commission or similar fee.
Is the worker free to make business decisions which affect his or her ability to profit from the work? An individual is normally an independent contractor when he or she is free to make business decisions which impact his or her ability to profit or suffer a loss.

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