Independent Contractors and the ABCs of Contract Law

Many states, notably California, have adopted the ABC test to determine whether work relationships are employment subject to minimum labor standards. Businesses that classify their workforce as independent contractors argue that the adoption of the ABC test violates the freedom to contract on any terms the parties choose. We argue that conceiving of the ABC test as a departure from or infringement of contract law is misguided. The ABC test, rather, represents a long overdue alignment of the contractual doctrines governing work with the liberal conception of contract. Its foundation is in the so-called common law definition of employment. Moreover, a genuinely liberal conception of contract requires that contracts for the provision of labor or services for remuneration be subject to minimum terms like those mandated by New Deal and Civil Rights Era legislation. Put differently, rather than an antidote to the ills of contract, the ABC model is, by and large, an entailment of liberal contract. Jurisdictions that adopt the ABC model have not effected a rupture from contract; quite the contrary, they have prevented abusing the idea of contract for a purpose that contravenes the telos of liberal contract. The ABC test does so, first, by preventing hiring entities’ use of what we deem a spurious version of contract law to opt out of the minimum labor standards laws that legislatures have deemed necessary to protect workers, their families and communities, and the economy. Second, it informs the analysis of the contractual relationship between hiring entities and their workforce even if the workers are properly deemed independent contractors. Contract, in other words, need not be the enemy of the
effort to establish minimum labor standards. Because the ABC test aligns the law governing work agreements with the principles animating modern contract law writ large, the test should be proudly defended, expansively interpreted, and broadly followed.