California Bill Would Significantly Change the Definition of an Employee

California businesses who rely on “gig workers” to perform the work for the company may soon need to restructure their business model based on a new bill that has been passed by Congress in California and is expected to be signed soon by Governor Gavin Newsom. This new bill would require that companies using these “gig workers” (the two biggest companies being Uber and Lyft) reclassify their workers to be considered employees rather than continue to be classified as independent contractors.  

It’s important to note that this would only apply to California workers. The National Labor Relations Board (NLRB) ruled earlier this year that Uber drivers (and similar workers) were independent contractors because they used their own equipment, set their own schedules, could work for competitors, and were responsible for their own profit and/or loss. Continue reading

Employee or Independent Contractor? Eleven Tests for Correct Classification

team-spirit-437507_1280

UPDATE: The Department of Labor has released a memo providing employer guidance for determining whether a worker should be classified as an employee or independent contractor.  Click here for our more recent post.

Should your new worker be classified as an independent contractor or employee?  Review these eleven tests, divided into three main categories, to ensure you are classifying correctly.

Continue reading

Employee or Independent Contractor? Two Tax Court Cases

1428631_83293066

Does your firm use outside workers for some jobs?  This can result in significant tax breaks if the workers are properly classified as independent contractors rather than employees.

Key point: If a worker is an employee, your company must withhold federal income tax and employment taxes from his or her wages.  In addition, your business is responsible for paying the employer’s share of federal payroll taxes.  Conversely, if a worker is characterized as an independent contractor, your company isn’t liable for these payroll tax obligations.

Continue reading