Employers have long misclassified employees as independent contractors to avoid paying payroll taxes. However, with the expansion of companies like Uber that rely on contractors, the practice has gained scrutiny in some states.

The California Supreme Court recently issued a ruling that establishes strict criteria an employee must meet to be classified as an independent contractor.

Ballard Spahr's Denise Keyser, a partner in the Labor and Employment Department, compared the ruling to similar case law in New Jersey. "Independent contractors don't exist in New Jersey, people say," said Keyser. She points out that, in New Jersey, employers face "a real uphill climb" if they're in court over a worker misclassification case.

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