Independent Contractors, aka “1099s”

Even after several very public class action settlements (think Uber) and solid advice from HR professionals, some employers still seem to think it’s an easy call and profitable business decision to classify people as “independent contractors”.  The latest California Supreme Court decision, Dynamex Operations West Inc. v. Superior Court (2018), rules against a company that, in the opinion of the Court, miss-classified employees as contractors.

A valuable piece of guidance from the Court in this matter is helpful, even though the ruling isn’t exactly good news for employers.  The Court declared a three-part test to determine whether a person is a contractor or employee.  All three prongs of the test must be satisfied.  They are:

(1) The worker must be free, in everyday tasks, from the business’s control and direction;
(2) The work performed must be outside the usual course of the business’s operations; and
(3) The worker must be customarily engaged in an independent occupation or business of the same type as the work he or she is performing for the employer.

The control issue (1) isn’t so new; however, the “work performed must be outside the usual course of the the business’s operations” test (2) is more specific.  In Dyamex,  the Court ruled that delivery drivers could not be considered independent contractors, that is, how can delivery drivers be seen as doing work that is outside the usual course of the business, especially when the employer’s business model predicates it’s profit margin on non-employee delivery drivers for product distribution?  Test (3) reiterates that an independent contractor must indeed “quack like a duck to be a duck”, that is, have a DBA, bill clients for service, be paid through Accounts Payable, not Payroll, and have a business license and tax ID number.

Please friends, think long and hard before classifying someone as an independent contractor just to avoid payroll taxes, worker’s comp, or other perceived “benefits” of doing so!

As always, let me know if I can provide assistance when making your HR decisions.

 

 

Top Ten Human Resources Must-Do’s for 2018

Every new year I try to share the top ten must do tasks for HR.  This year it was really hard to keep it to a top ten.   Here are the ones that made the list, not in order of importance because they are all important.  Please note that this alert is meant to be a brief discussion of laws and not meant to be a full legal analysis.  Always get professional help when dealing with issues of employment and labor laws. Read the rest of this entry »

New I-9 form issued by USCIS

On July 17th the US Citizenship and Immigration Services (USCIS) issued a new version of the I-9 form (used to verify work eligibility).  The new form can be completed electronically or in paper and pen format.  The new form must be used for all new hires on September 18, 2017 and going forward, however, I recommend that your hiring managers begin using them immediately in order to get used to the new forms and instructions.  Below is a link to both forms and instructions.

https://www.uscis.gov/i-9

Failure to comply with the most current I-9 forms and instructions comes with significant fines from the USCIS.  Please let me know if you need assistance with the new forms.  If your company relies heavily on non-citizen employees, I strongly encourage you to develop a relationship with a competent immigration attorney.

DOL Will Revisit Salary Level for Exempt Employees July 2017

You may recall that last year the US Department of Labor (DOL) adopted a rule that any employee who is considered exempt under the Fair Labor Standards Act must make at least $47,476 per year.  That rule was to become effective December 1, 2016.  However, a court injunction blocked that rule from becoming effective on November 22, 2016.

For the first time in recent history, this Federal ruling actually went further than California employment law which mandates an annual salary threshold of two times the current minimum wage, or $43,680 per year.  (Some cities and counties have adopted their own minimum wage that will affect this threshold). Read the rest of this entry »

Federal Judge Temporary Injunction Tables December 1 Deadline for DOL Regs

US Department of Labor regulations that were scheduled to go into effect on December 1, 2016 have been tabled for now.  This is the change in the salary test for exempt employees which basically doubled the salary that an employee would have to make in order to be considered exempt from overtime and other wage and hour provisions.

Today, a Federal judge issued a temporary injunction on behalf of 21 states and 50 business organizations on the basis that the new regulations would be overly burdensome to employers.  This injunction temporarily blocks the regulation from becoming effective on December 1, 2016 pending a trial on the merits of the case.

Before we all celebrate, the injunction is temporary.  It is unclear how the new Trump administration will act toward this issue but for now, the December 1st deadline is postponed indefinitely.  Also, remember that California could issue it’s own regulations that could copy the Fed rules that are now on hold.

It is important to note that there are two tests regarding exemption:  one is the salary test but the other is the duties test which very narrowly defines the kind of work, the level of authority and the amount of independent judgement an employee is allowed to exercise.

Stay tuned, but for now Happy Thanksgiving!