Independent Contractor Misclassification and Compliance News: August, 2018

By MBO Partners | August 31, 2018

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Independent Contractor Misclassification and Compliance News August, 2018

As the independent workforce continues to grow, so do the issues of worker compliance and misclassification. It is important for enterprises to remain informed about the latest laws, regulations, and developments surrounding these topics. Each month, we’ll bring you the latest news stories from around the web.

1. California Legislature Will Not Address Dynamex This Session

In April, the California Supreme Court adopted a new standard for determining if a worker is an employee or independent contractor—the ABC test. The new test makes it significantly more difficult for an entity to classify a worker as an independent contractor.

The California Chamber of Commerce, joined by a number of other organizations and companies, requested the legislature to address the decision and adopt a more balanced approach to classifying workers. In addition, a number of gig firms asked the legislature to address the ruling.

While businesses and industry organizations strongly support modifying the ruling, labor organizations are opposed to any change. The California legislature is not going to address the decision this term. Both the Assembly Speaker and the Senate President Pro Tem said that there wasn’t enough time before the of the legislative session to thoughtfully address the new test. Employers in California will have to cope with the Dynamex decision at least until next year.

2. Department of Labor (DOL) Issues Guidance on Independent Contractors for Nurses and Caregivers in the Home Care Registry Industry

In July, the Wage and Hour Division of the DOL issued a Field Assistance Bulletin (FAB) with guidance on how to classify workers in the caregiver registry industry. The FAB says it will consider the “totality of the circumstances” in determining whether a worker is an employee or independent contractor.

The “totality of circumstances” approach is a more traditional approach to classifying workers and includes factors such as who controls the manner and means of doing the work. The DOL offers guidance on what will and will not be considered in determining whether a worker is an employee. Some of the factors are:

  • Conducting a background check does not suggest employer status but interviewing candidates may indicate the registry is an employer
  • The ability to hire or fire a worker indicates employment status
  • A registry may communicate the typical pay rate for services but if the registry sets the pay rate, then it is acting as an employer
  • Tracking hours does not suggest a registry is an employer

This FAB is a step back from the 2015 Administrative Interpretation which stated that most workers were employees under the FLSA. With the guidance in this FAB, a registry can avoid being determined to be an employer.

3. Louisiana Conducts Unannounced Inspections Looking for Misclassified Workers

The Louisiana Workforce Commission (LWC) conducted unannounced inspections of construction worksites based on credible tips looking for construction workers who were misclassified as independent contractors.

LWC visited construction sites in New Orleans by unemployment insurance tax auditors and workers compensation authorities. These inspections are part of Louisiana’s efforts to fight misclassification of workers.

For more information, check out our resources page on misclassification and compliance, or contractor engagement best practices. If you have any questions about engagement, classification, or management of your independent workforce, we’re always here to help.

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