A 2016 study by economists at Harvard and Princeton universities estimated 12.5 million people were considered “independent contractors,” or 8.4 percent of the U.S. workforce. But here in the mostly great, partly sunny state of California, a new ruling by the California Supreme Court is likely to lead many employers in California to immediately question whether they should reclassify independent contractors rather than face stiff fines for misclassification, according to the LA Times.
To classify someone as an independent contractor, the court said, businesses must show that the worker is “free from the control and direction of the employer; performs work that is outside the hirer’s core business; and customarily engages in “an independently established trade, occupation or business. When a worker has not independently decided to engage in an independently established business, but instead is simply designated an independent contractor … there is a substantial risk that the hiring business is attempting to evade the demands of an applicable wage order through misclassification,” Chief Justice Tani Cantil-Sakauye wrote for the court.
Yes, it’s exciting stuff. And IF you’re a business getting ready to reclassify some or all of your company’s ICs, you need to know that your new “employees” might just push you over that magical 50 employee mark and thus, you’ll need to offer health insurance or face penalties. Isn’t running a business fun?
Hey, knowing all the changing rules is just another way that Moore Benefits helps you rule your world. If you have any questions about how this issue could impact your benefits programs or your compliance with the federal and state laws, call our team of health insurance and employee benefits experts to get the answers and the help you need!