The Research Foundation may engage the services of an independent contractor (IC) on a short-term, intermittent, or an as-needed basis to perform specific tasks or services. These specific tasks or services are those not normally provided by Research Foundation employees.
On September 18, 2019, Governor Gavin Newsom signed Assembly Bill 5 (AB 5) into law, which codifies the California Supreme Court’s “ABC test” for independent contractors as stated in the Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) case.
AB 5 became law on January 1, 2020. It formally adds Section 2750.3 to the California Labor Code. Pursuant to AB 5, the “ABC test” must be used to determine whether or not a worker providing services to a California employer is an employee or an Independent Contractor.
Under AB 5 and the ABC test, a worker in California is presumed to be an employee, unless an employer proves that the worker:
(A) Is free from the control and direction of the company in performing work, both practically and in the contractual agreement between the parties; and
(B) Performs work that is outside the usual course of the company’s business; and
(C) Is customarily engaged in an independently established trade, occupation, or business which is of the same nature as the work he or she performs for the company.
There are exceptions, and Research Foundation Human Resources professionals can provide specific guidance and direction.
The Research Foundation will exercise caution and due diligence in its assessment of all requests to classify workers as Independent Contractors. In addition to ensuring compliance with updated applicable laws, there are steep penalties to organizations for misclassifying a worker as an Independent Contractor.
The “ABC” test does not apply to out of state independent contractors. All out-of-state ICs must comply with their home resident state’s regulations regarding the establishment of an independent contractor agreement with the Research Foundation, a California corporation. The out-of-state IC will be asked to affirm that he or she has done so as a prerequisite for the granting of IC status with the Research Foundation. The Research Foundation will continue to use the multi-factor form currently in use to determine IC status for proposed Out of State IC’s. Current IC forms can be located at:
The Research Foundation Independent Contractor Checklist and Agreement is not complete, final, or ready to be implemented, nor is the IC permitted to start work, until requisite approvals, in writing, are obtained from the principal investigator, the director of HR (or his or her designee), the sponsored programs manager, and Research Foundation purchasing. No work may begin until the IC agreement has been signed off by all parties.
Agreements for IC services are established for a period not to exceed twelve months or the grant end date, irrespective of project periods. Contracts must specify the expected number of service days or months. If the need for services extends beyond the specified service period, a new independent contractor agreement may be established. However, requisite laws will be followed. Agreements that extend past the grant end date will need the approval of the Research Foundation's senior director of Sponsored Programs or his or her designee.