Independent Contractor or Employee? Answer Correctly to Avoid Devastating Fines, Lawsuits
Are your independent contractors now employees? Answer this question wrong, and your company could face significant fines and penalties. Watch this CLCA Member Advantage webinar to help determine the right course of action for your business.
In a change called “one of the most significant disruptions to California employment law in decades,” many workers in California will now be classified as employees instead of independent contractors (also informally known as “1099” workers).
Our presenter is Attorney Jennifer Grady of The Grady Firm, P.C., a long-time friend of CLCA. Over the years, she has presented several well-received HR webinars and Landscape Industry Show presentations for the benefit of CLCA members.
Employers who do not comply with new independent contractor law that takes effect January 1, 2020 face significant fines and penalties. Worse news: The newly created exemptions to the law will apply retroactively to existing claims and actions.
“Unfortunately for California employers,” Grady says in a blog post, “this new law is far from clear and is likely to result in increased litigation, with potentially devastating consequences for businesses that have or continue to misclassify their workers.”
To be safe during this time of flux and ongoing court battles, Grady explains, smaller companies that lack the big budgets for extended court battles may decide to reclassify their workers as employees preemptively. While it may cost more in the short-term, it could save substantial time and money by preventing a future claim for misclassification.
Who Is an Independent Contractor?
According to Assembly Bill 5, which Gov. Gavin Newsom signed into law on September 18, 2019, three elements must be met to allow an employer to classify their worker as an independent contractor:
- The business is not able to control or direct what the worker does, either by contract or in actual practice,
- The worker performs tasks outside of the entity’s usual business, and
- The worker is engaged in an independently-established trade, occupation or business.
NOTE: Information presented in this webinar was accurate as of the date of presentation (January 9, 2020). As the presenter notes, the legal situation surrounding this issue is extremely fluid and subject to change as courts and bureaucrats refine the law’s implementation.