New Rules for Contractors, Part 1

We’ve been waiting for more than a year to hear more information about independent contractors. Last year the California Supreme Court created the ABC test, which made it difficult to justify using independent contractors.

The decision to hire someone as an independent contractor lies with the hiring company. If your company misclassifies that worker, your company will be the only one held legally responsible. The contractor holds no liability so it’s important you do your due diligence. The default is they are an employee and they are subject to the ABC test.

The passing of AB5 clarifies who will be exempt from the ABC test. If they are exempt from ABC, they must instead pass the Borello test. Let’s first look at the parts of each test.

ABC Test

The workers must pass all 3 points. If they fail any of these, they must be an employee.

A — You can’t control the services or how the worker performs the work (this means you can only tell them the outcome you want, not how they get there).B — The work performed must be outside the usual course of your business (this means the work they do doesn’t touch your clients,  [click to read more …]

Who’s in Control?

GrubHub is a company who provides connections between restaurants and delivery drivers classified as independent contractors. GrubHub had a driver, Lawson, who filed a lawsuit claiming he should have been an employee. You might wonder why the classification is such a big deal.

Your HR Survival Tip

If a worker is classified as an independent contractor, there are several wage and hour law perks they didn’t get, such as meal breaks, paid rest breaks, overtime pay, or paid sick leave. If the company was wrong about the classification, the company now has to pay the worker for all those lost benefits over the past 4 years. The company is also responsible for the worker’s payroll taxes, fines, penalties, and attorney fees. Overall, misclassifications can be very expensive.

The GrubHub case was heard in 2017 and GrubHub won. The court provided numerous examples of why that decision was reached. Would the court say the same about your independent contractors? Here are the points made:

GrubHub exercised little control over the details of Lawson’s work. Lawson wasn’t required to have any particular training or orientation. GrubHub didn’t conduct performance evaluations. Lawson could decide not to work, right up to the moment the  [click to read more …]