Archive for Employees V Contractors

California Worker Status: Employees And Independent Contractors

CALIFORNIA LAW

The most widely reported legislation passed in 2019 was Assembly Bill 5, which was effective January 1, 2020 and codified new standards to determine whether a worker is an employee or an independent contractor. AB 5 incorporated the “ABC Test” introduced in 2018 by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. The ABC Test presumes that all workers are employees, which means that the company hiring them must prove that workers meet all of the following three conditions to properly classify them as independent contractors:

Read More

Written by | Posted in Employees V Contractors

Independent Contractor And Employee: Why It Matters

Clifford Benjamin- Contractor Or Employee

If you hire someone for a long-term, full-time project or a series of projects that are likely to last for an extended period, you must pay special attention to the difference between independent contractors and employees.

Why It Matters

The Internal Revenue Service and state regulators scrutinize the distinction between employees and independent contractors because many business owners try to categorize as many of their workers as possible as independent contractors rather than as employees. They do this because independent contractors are not covered by unemployment and workers’ compensation, or by federal and state wage, hour, anti-discrimination, and labor laws. In addition, businesses do not have to pay federal payroll taxes on amounts paid to independent contractors.

If you incorrectly classify an employee as an independent contractor, you can be held liable for employment taxes for that worker, plus a penalty.

The Difference Between Employees and Independent Contractors

Independent Contractors are individuals who contract with a business to perform a specific project or set of projects. You, the payer, have the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result.
Read More

Written by | Posted in Employee • Employees V Contractors • Independent Contractors

AB 5 Alternative Or How Business Owners Can Better Spend $800 Per Year

AB 5 Rules

In September 2019, California enacted a new worker classification approach called the ABC test (AB 5 – see Oct 2019 post). Basically, AB 5 starts with the presumption that all workers are employees rather than independent contractors (unless they work for the State of California which is exempt from many state labor laws). If A, B and C of the law are met, the worker is a contractor.  If A, B and C are not met, the parties need to see if any of about 50 exemptions apply and if yes, then apply the pre-AB 5 classification system which primarily looks at factors to determine if the employer has the right to control the manner and means of how the worker does his/her work.

While one goal was to be sure workers are not disadvantaged by some employers who may pay low amounts, I believe the law has far more disadvantages than advantages, there were definitely better and more modern ways to improve the law, and there are a lot of new complexities and confusion.  The new legislative year also started with over 25 proposals to add more exemptions and clarifications or even to repeal AB 5.

Read More

Written by | Posted in AB 5 • Employees V Contractors