Fillable Printable Information Sheet: Automotive Repair Industry (De 231B)
Fillable Printable Information Sheet: Automotive Repair Industry (De 231B)
Information Sheet: Automotive Repair Industry (De 231B)
AUTOMOTIVE REPAIR INDUSTRY
The automotive repair industry consists of businesses
engaged in the service and repair of motor vehicles.
Motor vehicles include, but are not limited to,
automobiles, trucks, vans, recreational vehicles,
limousines, and hearses. This industry generally
includes the following types of businesses:
- Top, Body, & Upholstery Repair Shops
- Automotive Paint Shops
- Automotive Exhaust System Repair Shops
- Tire Retreading & Repair Shops
- Automotive Glass Replacement Shops
- Automotive Transmission Repair Shops
- Diesel Engine Repair Shops
- Automotive Tune-Up Shops
- Automotive Brake System Repair Shops
- Automotive Radiator Repair Shops
- Automotive Wheel Alignment Shops
- Automotive Oil Change & Lube Shops
- General Automotive Repair Shops
WHO IS AN EMPLOYEE?
An “employee” includes all of the following:
• Any officer of a corporation.
• Any worker who is an employee under the usual
common law rules.
• Any worker whose services are specifically covered
by law. (Refer to Information Sheet: Statutory
Employees [DE 231SE].)
An employee may perform services on a less than
full-time or permanent basis. The law does not exclude
services from employment that are commonly referred
to as day labor, part-time help, casual labor, temporary
help, probationary, or outside labor.
Who Is a Common Law Employee?
Whether an individual is an employee for the purpose
of Section 621(b) of the California Unemployment
Insurance Code (CUIC) will be determined by the
usual common law rules applicable in determining an
employer-employee relationship. To determine whether
one performs services for another as an employee,
the most important factor is the right of the principal
to control the manner and means of accomplishing
a desired result. The right to control, whether or not
exercised, is the most important factor in determining the
relationship. The right to discharge a worker at will and
without cause is strong evidence of the right to control.
Other factors to take into consideration are:
1. Whether or not the one performing the services is
engaged in a separately established occupation or
business.
2. The kind of occupation, with reference to whether,
in the locality, the work is usually done under the
direction of a principal without supervision.
3. The skill required in performing the services and
accomplishing the desired result.
4. Whether the principal or the person providing the
services supplies the instrumentalities, tools, and
the place of work for the person doing the work.
5. The length of time for which the services are
performed to determine whether the performance is
an isolated event or continuous in nature.
6. The method of payment, whether by the time, a
piece rate, or by the job.
7. Whether or not the work is part of the regular
business of the principal, or whether the work is not
within the regular business of the principal.
8. Whether or not the parties believe they are creating
the relationship of employer and employee.
9. The extent of actual control exercised by the
principal over the manner and means of performing
the services.
10. Whether the principal is or is not engaged in a
business enterprise or whether the services being
performed are for the benefit or convenience of the
principal as an individual.
Another consideration relative to employment is whether
or not the worker can make business decisions that
would enable him or her to earn a profit or incur a
financial loss. Investment of the worker’s time does not
show a risk of loss.
The numbered factors above are evidence of the
right to control. These factors are described more
fully in Section 4304-1 of Title 22, California Code of
Regulations. A determination of whether an individual is
an employee will depend upon a grouping of factors that
are significant in relation to the service being performed,
rather than depending on a single controlling factor.
DE 231B Rev. 4 (6-11) (INTERNET) Page 1 of 2 CU
The courts and the California Unemployment Insurance
Appeals Board (CUIAB) have held that the existence of a
written contract is not, by itself, a determining factor. The
actual practices of the parties in a relationship are more
important than the wording of a contract in determining
whether a worker is an employee or independent
contractor.
Examples
The CUIAB has previously considered the status of auto
repair workers. The CUIAB has generally held that auto
mechanics and repair workers are employees and not
independent contractors in cases where they work under
some or all of the following circumstances:
• The services are performed on the employer’s
premises.
• The services are an integral part of the employer’s
business.
• The employer provides major equipment and the
basic supplies and materials. (However, mechanics
frequently own tools of a substantial value. This is
typically not an indication that the mechanic is an
independent contractor.)
• The employer sets the hours and assigns the work.
• The services are continuous in nature and not for a
definite period of time.
• The employer collects all receipts and bears the
risk of loss for bad debts.
• Services can be terminated at will.
The CUIAB has held that auto mechanics and
repair workers are independent contractors in cases
where they work under some or all of the following
circumstances:
• The work is performed off the principal’s premises.
• The work is performed after business hours.
• The worker has a business license and his/her own
established business.
• The worker shares the risk of loss as to unpaid
billings and bad checks.
• The worker bids the job and is responsible to
complete the job for the bid amount.
• The worker hires and pays his/her own helpers.
• The worker deals with the customers directly and is
responsible to them for the work performed.
The above-mentioned cases may not encompass the
entire set of factors used by the CUIAB in establishing
an employee or independent contractor status and are
presented here as examples only. The Employment
Development Department (EDD) and the CUIAB will
determine status on a case-by-case basis by applying
the applicable CUIC sections to the specific facts existing
in a particular working relationship.
ADDITIONAL INFORMATION
For further assistance, please contact the Taxpayer
Assistance Center at (888) 745-3886 or visit the nearest
Employment Tax Office listed in the California Employer’s
Guide (DE 44) and on EDD’s Web site at
www.edd.ca.gov/Office_Locator/. Additional information
is also available through EDD’s no-fee payroll tax
seminars and online courses. View the in-person
and online course offerings on EDD’s Web site at
www.edd.ca.gov/Payroll_Tax_Seminars/.
The following EDD resources are also available to help
determine the correct classification of the workers.
Employment Determination Guide (DE 38)
The guide asks a series of “Yes” or “No” questions
regarding the treatment of workers to help determine if
a worker is most likely an employee or an independent
contactor and whether you need to seek additional
guidance. To obtain this guide, access EDD’s Web site at
www.edd.ca.gov/pdf_pub_ctr/de38.pdf.
Determination of Employment Work Status for
Purposes of California Employment Taxes and
Personal Income Tax Withholding (DE 1870)
The form provides a series of questions regarding
the working relationship between the principal and
the workers. After the form has been completed and
returned, EDD will issue a written determination stating
whether the workers are employees or independent
contractors based on the facts provided. To obtain this
form, access EDD’s Web site at
www.edd.ca.gov/pdf_pub_ctr/de1870.pdf.
The EDD is an equal opportunity employer/program.
Auxiliary aids and services are available upon request to
individuals with disabilities. Requests for services, aids,
and/or alternate formats need to be made by calling
(888) 745-3886 (voice) or TTY (800) 547-9565.
This information sheet is provided as a public service and is intended to provide nontechnical assistance. Every attempt has been made
to provide information that is consistent with the appropriate statutes, rules, and administrative and court decisions. Any information that
is inconsistent with the law, regulations, and administrative and court decisions is not binding on either the Employment Development
Department or the taxpayer. Any information provided is not intended to be legal, accounting, tax, investment or other professional advice.
DE 231B Rev. 4 (6-11) (INTERNET) Page 2 of 2
