PPB March 2020

While most employers and their workers will need tomeet these conditions, there are a few exceptions that would need to follow the multifactor Borello test, including: • When the Legislature or IWC has defined an employment relationship in a certain way; • When a court determines the ABC test cannot be applied; or if the occupation or contracting relationship is specifically exempted. More information on the ABC and Borello tests, exemptions and requirements under AB5 are available on the State of California’s Department of Industrial Relations site at www.dir.ca.gov/dlse/FAQ_ IndependentContractor.htm. California-based companies should take these actions: • Determine which workers are now classified as independent contractors. • Review the list of exemptions to determine if you must apply the ABC test or the Borello test. • Examine carefully each worker’s actual job duties, expectations, control, supervision, etc. applying the applicable test. • If applying the ABC test, be sure workers meet all three conditions to be classified as an independent contractor. • If you need to reclassify a worker from an independent contractor to an employee, be sure to update your records, get the employee on your W-2 payroll, and be sure the employee is covered by unemployment and Workers’ Comp as well as other state benefits. • If there is a question about the worker’s classification, it is best to default to “employee” as it is usually more beneficial for the individual. This article is for general informational purposes only; it is not legal advice and should not be relied upon as such. Each reader is encouraged to consult independent legal counsel before making any decisions concerning the matters in this communication. Claudia St. John, SPHR, SHRM-SCP is president of Affinity HR Group. Paige McAllister, SPHR, SHRM-SCP is vice president, HR compliance at Affinity HR Group, PPAI’s affiliated human resources partner, specializing in providing human resources assistance to associations, including PPAI and its member companies. www.affinityHRgroup.com. Q&A What You Want To Know Claudia St. John and Paige McAllister provided answers to these questions and others during the live presentation of PPAI’s webinar, California’s New Independent Contractor Rules. They also recommended consulting a labor attorney to better understand the rules, exemptions and to discuss specific situations. What if the company doesn’t sell but the sales are made by independent contractor sales reps? If a company is making something that must get to somebody, the purpose of the company is to sell the products, not keep them in a warehouse. How do you distribute? Through sales. So even if the company itself has no salespeople on the books, it doesn’t mean that the company isn’t set up for sales. Look at it this way: if you didn’t have salespeople, would your business survive? If the answer is no, I would assume the salesperson would be classified as an employee. If a salesperson has their own business with their own tax ID and sells for a company, do they fall under this new law? PPAI Online Education In February, the authors covered this topic in PPAI’s 60-minute webinar, California’s New Independent Contractor Rules. It covered the basic assumptions of the new law as well as the implications of re-classifying employees/ independent contractors. The webinar is available for download at https:// onlineeducation.ppai.org/ products/californias-new- independent-contractor-rules. If there is a question about the worker’s classification, it is best to default to “employee” as it is usuallymore beneficial for the individual. | MARCH 2020 | 93 THINK