The ABC Test: A New Model for Employment Status Determination?

Abstract

Abstract The tests for identifying who is an ‘employee’—the gateway for a multitude of employment rights—have preoccupied generations of labour lawyers. It is relatively rare, however, to see a significant change in the law itself in this area. We are currently witnessing such a rare change in the USA, where a new test called the ‘ABC test’ was adopted in California and is gaining support elsewhere. The new California test starts with a legal presumption of employee status. To rebut the presumption, the hiring party has to demonstrate that all the following conditions are satisfied: no control over the worker, the work is outside the usual course of the employer’s business and the worker is customarily engaged in an independently established business. The goal of this article is examine whether this new test is normatively better than previous tests and should be regarded as a model for legislation in other countries as well. Our assessment is made in light of three benchmarks: whether the new test successfully advances the purpose of labour laws, whether it adopts an optimal balance between selectivity and universalism, and whether it strikes an optimal balance between rules and standards. Our conclusion is generally positive, but at the same time we argue that some modifications are necessary to improve the test and make it a useful model.