In the UK, the courts and tribunals apply a number of tests and factors to determine if an individual is an employee, a worker (a hybrid status reflecting the view that some individuals, while not full-blown employees entitled to the whole range of employment rights, are deserving of some protection), or self-employed (ie an independent contractor). The application of these tests and factors is complex and important, as the three classifications affect an individual’s employment rights. Traditionally this complexity has led to litigation focusing on whether an individual is an employee or a worker.

The same can be said in California. The question of whether an individual should be classified as an employee has similar significance. If an individual is an employee, the employer bears the responsibility of paying social security and payroll taxes, unemployment insurance taxes and state employment taxes, providing worker’s compensation insurance, and of course, complying with state and federal statutes governing the wages, hours, and working conditions of employees.

The development of increasingly flexible working practices in both California and in the UK, alongside the rapid expansion of the gig economy, has seen the lines become blurred between employment statuses. This has led to an increase in litigation in both jurisdictions and like the UK, recently California has seen important employment status decisions.

These cases carry significant risk because the liabilities associated with applying the wrong categorisation are large. To find out more, visit: Shifting Sands: how employment rights and status are changing in the UK and California