Written by Gabriel Dillard
When it comes to independent contractors in California, a one-size-fits-all approach only serves to needlessly hobble the economy, according to a new study from Beacon Economics.
The report, “Understanding California’s Dynamex Decision 2018,” is in response to the California Supreme Court’s new independent contractor test laid out in its “Dynamex” decision from April. The decision sets out the circumstances under which a worker must be classified as an employee, rather than as an independent contractor.
The so-called “ABC” test identifies three factors an employer must meet to maintain an independent contractor relationship with a worker. The most significant one, according to the California Chamber of Commerce, is that the contractor must perform work that is not the hiring entity’s usual business.
The Beacon Economics study states that while the so-called “gig economy” –think Uber, Lyft, etc. – has shed a renewed light on this issue, alternative work arrangements have long been a part of the modern economy. In fact, in California, the entertainment, professional, scientific and technical services, transportation and real estate industries rely on independent contractors.
The failure to recognize the need for flexibility when it comes to independent contracting could have an “unprecedented and unpredictable” impact on our state’s economy, according to the study.
Given the potential for chaos, the report correctly states that lawmakers must find a better way to assist the minority of workers who engage in alternative work arrangements but would prefer more traditional forms of work.
For employers, if you use independent contractors, meet with an attorney to ensure you aren’t putting yourself in legal jeopardy.