Are Santa’s Elves Employees or Independent Contractors (updated)?


Years ago, I wrote short blog on the question of whether Santa’s elves were employees or independent contractors. With California adopting Massachusetts’ ABC test for determining if a worker is an employee or independent contractor, I thought I would revisit the question using the ABC standard to see if the elves would be considered employees or independent contractors in California and Massachusetts.

The ABC test requires an entity to demonstrate the following three criteria to justify a classification of the worker as an independent contractor.

(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Prongs (A) asks if the elves worked free from the control of Santa. Based on the TV movie Santa Claus Is Comin’ to Town, the Kringles previously had been the first toy makers to the king. If true, and they made the toys and Santa was merely the delivery agent, then Santa would not have the right to exercise control over the elves.

Prong (C) asks if the elves are customarily engaged in an independently established trade. Again, the story in Santa Claus Is Comin’ to Town suggests that the Kringles had previously been the first toymakers to the king which indicates (i) that there were other toymakers to the king, otherwise there would be no reason to designate them as the “first” toymakers to the kings; and (ii) that they previously had another customer and therefore were operating as an independent business.

Finally, prong (B) asks if the elves’ activity (building toys) is part of the usual course of business of Santa. The first question is: what is Santa’s business? How Santa’s business is defined has a significant effect on this question. If Santa’s business is delivering gifts to children who have been “nice”, one could argue that Santa is charitable version of Fedex and while he delivers the gifts, he doesn’t actually produce the gifts and therefore the elves are not part of his usual course of business. If Santa’s business is keeping a list and checking it twice, then the manufacturing of gifts might not be part of his usual course of business.

On the other hand, if Santa’s usual course of business is making and delivering gifts, then it’s not possible for the elves to be independent contractors in California or Massachusetts.

Whatever the classification of the elves, their dedication to making gifts for children and their generosity and kindness to others is the proper focus of the season.  

My best wishes to you and your families for a happy, healthy and joyous holiday season and for safe and prosperous new year!

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