New California Independent Contractor Standard Complicates things for Employers

Employers have long used independent contractors for a variety of means. Perhaps your business has a project-specific job set to run a fixed length of time that can only be done by a specific type of individual, who you will not need after the job is done. Perhaps your business likes to substitute contractors for employees to avoid the administrative hassles involved in hiring employees and paying the associated payroll taxes that go along with their employ. One of the foregoing situations is an appropriate use of a contractor, the other is not. In a new California Supreme Court decision, the state’s highest court has added some clarity as to when and how an individual can be classified as an independent contractor.

When employers misclassify employees as independent contractors, they can be liable for significant overtime penalties, but also for denied benefits (given to regular employees) and other significant exposure that can make a seemingly small problem a big mess. In Dynamex Operations West v. Lee, the California Supreme Court set forth a new standard known as the “ABC” test for properly classifying a worker as an independent contractor. While “ABC” sounds simple, make no mistake, this new standard will make it much more difficult for California employers to prove that someone working for their business was an independent contractor and not an employee.

The ABC Test

The ABC test presumes employment under the California wage and hour laws unless a business can prove that all of the following conditions are met:

Factor A

Factor A requires the business must not dictate the control and direction of the employee’s work. This means contractors must be free to set their own hours and totally come and go as they please. Many companies run into problems with this step when they require contractors to be involved in regular or semi-regular meetings, for example.

Factor B

Factor B requires the entity to prove that the contractor’s services are outside the usual course of the entity’s business. The best example of this is an accounting firm who needs someone to cut the grass outside their building once a week. Such work would not fall within the purview of accounting, and therefore would pass factor B. Alternatively, where a tech company hires a contractor to do some coding on a website for its client it is a lot more difficult to prove the work was outside the usual course of the tech company’s business.

Factor C

Finally, factor C requires a business to prove the existence of a contractor’s independent operation such as a business license, tax identification, incorporation, and work for other customers or clients.

When taken in conjunction you can see that California has done its best to do away with the use of independent contractors. If you have employees in that state we strongly encourage you to contact Syntrio today to schedule a demonstration of our California wage and hour training. Further, no matter what state you may operate in, it would be of great benefit for you to review your policies and procedures, as the use of independent contractors as a substitute for employees has fallen further out of favor under the federal scheme as well.


Syntrio is a leader in the human resources and employment law fields (as well as ethics and compliance) and is prepared to help your company implement a compliance program aimed at reducing the potential impact of harassment, discrimination and other employment law issues your organization may face. Syntrio takes an innovative philosophy towards employment law training program design and strives to engineer engaging, entertaining, and thought-provoking content
.

 


Contact www.syntrio.com for more information about our discrimination, harassment, and prevention of retaliation online courses and remember to follow us on Facebook, TwitterGoogle Plus and LinkedIn for daily updates on corporate compliance that impact your company.


Written by, Jon Gonzalez, Esq., Chief Counsel for Syntrio

 

Vermont Passes New Sexual Harassment Law

In the latest example of “keeping up with the Joneses,” last week Vermont passed new legislation aimed at reducing (and publicizing) incidents of sexual harassment in the workplace. Similar to laws passed in many other states in the wake of the #MeToo movement, Vermont’s new law guarantees independent contractors, volunteers, and interns a working environment “free from harassment,” just as it does regular employees.

Changes to Settlement Agreements

Vermont no longer allows companies to prohibit individuals who have settled claims of sexual harassment with the employer from working with that organization in the future. This is a sweeping change that is unique in the country, in that it makes it easier for employees who resolve claims to return to their jobs, or work for the company where the incident occurred in the future.

Investigation Procedures Revamped

Investigation practices are also changing under the new Vermont sexual harassment law. Prior to the passage of this legislation the Vermont Attorney General did not have the specific right to visit places of employment and examine their harassment prevention practices. Beginning July 1, employers will need to watch out for representatives from the Vermont Department of Human Rights auditing practices or even ordering training sessions if they find deficiencies in organizational harassment prevention tactics.

Online Filing System Implemented for Charges of Harassment

Lastly, Vermont’s new law is making it easier for complainants to file charges of sexual harassment and discrimination by allowing charges to be filed wholly online. By eliminating physical steps to be taken, the legislature aims to streamline the process in hopes that more victims will come forward with allegations of harassment. Of course, whenever state legislatures take these steps it makes it easier for frivolous claims to also be filed, which is why educating your workforce on what harassment is (and is not) has become all the more important in the wake of the new law.

If you have employees in Vermont we encourage you to contact a member of Syntrio’s staff to learn more about training options that are available to you and your organization.

Syntrio is a leader in the human resources and employment law fields (as well as ethics and compliance) and is prepared to help your company implement a compliance program aimed at reducing the potential impact of harassment, discrimination and other employment law issues your organization may face. Syntrio takes an innovative philosophy towards employment law training program design and strives to engineer engaging, entertaining, and thought-provoking content.

 


Contact www.syntrio.com for more information about our discrimination, harassment, and prevention of retaliation online courses and remember to follow us on Facebook, TwitterGoogle Plus and LinkedIn for daily updates on corporate compliance that impact your company.


Written by, Jon Gonzalez, Esq., Chief Counsel for Syntrio

 

Connecticut Enacts Law Barring Employers from Asking About Prior Compensation

Beginning on January 1, 2019 Connecticut employers of all sizes will no longer be allowed to inquire into prospective employees’ past compensation and compensation structures. On May 22, 2018 Connecticut Governor Daniel Malloy signed into law the “Act Concerning Pay Equity,” a new law aimed at protecting prospective employee privacy with respect to past compensation.

On May 22, 2018, Connecticut Governor Daniel Malloy signed into law the Act Concerning Pay Equity

Unlike some other similar laws around the country, Connecticut’s law will likely apply to any employee who files an application or interviews with a company in that state. In addition to inquiries about wage and salary history, the new law will prohibit employers from asking questions that may reveal the type and structure of compensation and the value of individual elements of how an employee was paid at his or her former jobs.

Important for employers to understand, violations of this new law will be serious, and can have financial implications if it is not followed. Indeed, the Act Concerning Pay Equity creates a private right of action for prospective employees to bring a claim against the employer. This claim will likely also be tied to discrimination or other employment law claims that could subject an employer to very costly litigation far into the future, as the claims carry a two-year statute of limitation.

Now may be a good time to review your company’s hiring policies

Now may be a good time to review your company’s hiring policies and/or application materials, and to re-train hiring managers to ensure they are no longer asking questions about salary history or compensation structure. It can be easy to fall into traps during an interview when employees begin asking questions about how they will be paid at their new job, if hired. Unless an employee offers up his prior pay unsolicited, your managers should never ask any questions that may even be probative of salary history or past compensation.

We strongly recommend consulting with our representatives to learn more about the training resources Syntrio offers to prevent wage and hour issues in the workplace. Syntrio’s subject matter experts are well in tune with changes to the law, and can help you and your company craft a plan of prevention that suits your business needs, no matter its size. We invite you to contact us today at 888-289-6670 or by filling out the online form available here.

Syntrio is a leader in the human resources and employment law fields (as well as ethics and compliance) and is prepared to help your company implement a compliance program aimed at reducing the potential impact of harassment, discrimination and other employment law issues your organization may face. Syntrio takes an innovative philosophy towards employment law training program design and strives to engineer engaging, entertaining, and thought-provoking content.


Contact www.syntrio.com for more information about our discrimination, harassment, and prevention of retaliation online courses and remember to follow us on Facebook, TwitterGoogle Plus and LinkedIn for daily updates on corporate compliance that impact your company.