Calvin Associates, Inc.

post »The Concept Of Independent Contractor Is Under Assault— Especially In California 8-13-16

August 16 2016, 11:48 pm

Bruce’s Summary: With today’s proliferation of on-demand businesses the definition of Independent Contractor and traditional Consultant is constantly redefined and can have a major impact on organizations. State agencies such as the EDD and federal agencies such as the DOL, NLRB and others are redefining the consulting landscape and raising the liability if employers are found to be in violation of these new and/or revised definitions.

The author outlines the State of California’s 2012 amended Labor Code which increased penalties for misclassification of workers and the California’s Employment Development Departments (EDD) enforcement of employment taxes through audits that make the employer responsible to prove otherwise.

The author focused on one of the major problems with defining who is and who isn’t an independent contractor. The author referred to the California Supreme Court’s 25 year old “right-to-control-test” which offered no bright-line answer to classifying workers. To add to the confusion, the EDD utilizes the above test but adds, according to the author, its own 23 separate factors to analyze whether work has been misclassified under the independent contractor category.

To add to the confusion, the federal test, called the “suffer or permit to work” test, is stricter, and according to the author, in July 2015, the U.S. Dept. of Labor issued Administrator’s interpretation No. 2015-1, which concluded that “{i}n sum, most workers are employees under the FLSA’s broad definition…”.

HR Professionals have their work cut out for them, with the constant changes and revisions enacted to state, federal and local laws. Audits have become a constant challenge to ensure organizations are in compliance. Partnerships with organizational counterparts have become even more critical in ensuring the day to day operations are run in an effective and efficient manner. “None of the information contained herein should be construed as legal advice, nor are Calvin Associates consultants engaged to offer legal advice. If there is a need for legal advice, please contact and seek the advice of independent legal counsel.”