The California Supreme Court recently ruled on a change to the test that a hiring entity must use in order to determine if a worker is an independent contractor or not. It’s a much stricter and, as a result, clearer test than what existed before or which exists now with the Department of Labor. Worker classification is notoriously nebulous. Now in California, the definition is much easier to interpret.
Tag: independent contractor
There are a few industries in which employees are often misclassified as independent contractors, and salons are one of the big ones. Most salon workers should be employees but are often classified incorrectly. It’s a widespread problem – a problem which costs workers money and, if they’re caught, costs employers a huge amount of money.
The gig economy has sparked a lot of discussion surrounding employee rights and, while no steadfast rules have yet to be determined on the subject of gig contractors vs gig employees, the topic is maturing as this new employment landscape continues to develop.
Just this week, in California, a federal judge ruled that Grubhub delivery drivers are indeed independent contractors. However, the case is far from closed. Not only does the plantiff’s lawyer plan to appeal the ruling but the California Supreme court is working on drafting a test for these workers, which should help settle the issue overall.
The Department of Labor reports that most workers are employees and that classifying employees incorrectly as independent contractors robs employees of their benefits. It also robs the government of taxes, so you can be sure they are pretty serious about enforcing the FLSA and catching the employers who misclassify their employees. If you have any doubt about the status of your workers, become familiar with the rules before you classify them as independent contractors.
Employers have always faced penalties for misclassifying employees as independent contractors but now, with the Affordable Care Act (ACA), some employers are finding yet another reason to try to skirt around the law.
Under the ACA, employers with 50 or more employees are required to offer health benefits to their workforce. If they don’t make health benefits available by the deadline, the company pays a penalty. You can see, then, how some companies might want to report having fewer than 50 employees so that they don’t have to offer health benefits.
Contributed by Gina Smith.
Businesses are discovering the many benefits of outsourcing. Often, companies can save thousands of dollars by hiring contractors versus full time employees to perform various functions including information technology, accounting, human resources, marketing and customer service. Outsourced staff can also offer a fresh and objective perspective about your company, products and services.
When hiring a new employee, an employer can either hire him as an independent contractor or as an employee. There are pros and cons to either choice and there are strict rules governing the decision too.