Senate bill (SB25) introduced February 2, 2015 proposes a uniform standard for determining IC/employee status under the wage and hour, unemployment compensation and workers’ compensation statutes. Required are seven factors: (a) the individual is free from control and direction in connection with the performance of the service; (b) the individual customarily is engaged in an independently established trade, occupation, profession, or business; the individual is a separate and distinct business entity from the entity for which the service is being performed or, if the individual is providing construction services and is a sole proprietorship or a partner in a partnership, the individual is a legitimate sole proprietorship or a partner in a legitimate partnership; (d) the individual incurs the main expenses and has continuing or recurring business liabilities related to the service performed; (e) the individual is liable for breach of contract for failure to complete the service; (f) an agreement, written or oral, express or implied, exists describing the service to be performed, the payment the individual will receive for performance of the service, and the time frame for completion of the service; and (g) the service performed by the individual is outside of the usual course of business of the employer.
President Obama’s proposed 2016 budget targets independent contractor misclassification as part of the “fissured workplace.” Labor Department’s Wage and Hour Division (WHD) submitted a robust budget justification to Congress the revenues to be gained from detecting and penalizing instances of misclassification.
As we’ve discussed in recent articles, the development of the “on-demand economy” hasn’t diminished the importance of compliance with worker classification laws. Two recent rulings in California federal courts last week involving the ride-sharing companies Uber and Lyft illustrate the increasing significance of these laws to the on-demand economy. John Rodgers of Bradley Arant Boult Cummings LLP discusses the matter in a recent JD Supra article.
Recently, drivers for the Uber and Lyft brought class action lawsuits in a California federal court suing their companies and alleging that they were misclassified as independent contractors, instead of employees.
Uber and Lyft responded by filing summary judgments, claiming that the
Chris Sutton, Partner – Clover Global Solutions, LP
For generations, the American workforce was comprised primarily of full-time employees who received all of the benefits – overtime pay, health insurance, paid vacations, etc.,– that their statuses conferred. Yet in recent years, a rising tide of independent contractors has saturated businesses from coast to coast. The financial incentive to employers for hiring contractors is easy to understand: Independent contractors aren’t covered by federal or state wage and hour laws, for instance, and are ineligible for employee benefits such as health insurance and participation in company retirement plans. In addition, employers aren’t required to pay Social Security, Medicare and unemployment taxes for independent contractors. [Read more…]
The way you manage your total workforce (including temporary employees and independent contractors) directly influences your ability to recruit new talent and respond to market opportunities.