Independent Contractors – To Be or Not to Be (That’s the question)
Employers who misclassify workers as independent contractors can face heavy fines and penalties. Among the most recent suits in California, the California Labor Commissioner awarded nearly $6 million to 24 drivers who sued their carriers claiming they were misclassified as contractors. Therefore, employers must be especially cautious in determining whether a worker is an employee versus an independent contractor.
In 2018, a California Supreme Court ruling provided a new standard in the state for determining whether a worker should be classified as an
employee or an independent contractor, essentially narrowing the definition.
The three requirements were named the “ABC’s” of independent contractors. If a company cannot satisfy all three requirements, the workers assigned as contractors may be ruled unlawfully misclassified.
ABC’s of Independent Contractors:
A) The worker is free from control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of work and in fact;
B) The worker performs work outside the usual course of the hiring entity’s business; and
C) That that worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
When it comes to Human Resources, decisions regarding personnel are critical to your firms’ level of exposure and risk for litigation. Reducing the threat of employee lawsuits and shoring up company policies and practices will help ensure your business is sustainable and fortified for long-term success
To learn more about employee classifications, laws and requirements, call one of our HR experts at OmegaComp HR today. OmegaComp HR provides comprehensive outsourcing solutions with assistance as a complete HR department or as a member of your HR team.
Call 916-266-4370 or email us to start a conversation!