A California Supreme Court decision that rewrote guidelines for classifying independent contractors leaves businesses expressing different opinions and legal experts grasping its parameters.
Justices outlined a three-part test to determine if a worker qualifies. This, it said, should replace the old standard, which the court called more complicated and open to interpretation. For an individual to qualify as an independent, individuals must meet all criteria in a so-called ABC test: They must not fall under control of the hiring firm; they must perform different work than the contracting entity; and they must have formed an independently established business.
The business community bristled. “... Employers in California that rely on independent contractors are about to discover that the California Supreme Court may have just put their business model in jeopardy,” said Sean P. Redmond, executive director of labor policy for the U.S. Chamber of Commerce in a blog entry.
In aquatics, experts believe this will have the greatest impact on relationships with instructors.
Some agree the ABC test is clearer but worry about the decision’s financial effects. Others who already classify their workers as employees applaud the decision, saying it puts companies on an equal footing. Whatever one’s opinion about the development, this is a court decision, not legislation or a regulation. That muddies the issue of compliance, as no deadline exists by which business owners can show good faith. Instead, some worry about falling on the radar of state regulators if so-called independent contractors file claims or complaints.
Attorneys are grappling with this question as well. The California Employment Law Council filed a request with the state’s Supreme Court, asking it to specify that the test applies after the decision rather than retroactively.
Gray-area scenarios exist, but there are clear examples of infraction. “The bottom line is the worker cannot be performing your core function” as an independent contractor, said attorney Steve Getzoff, outside general counsel for the Association of Pool and Spa Professionals.
Individuals who only work for one company should be classified as employees, some say. Another obvious indicator: If a company changed the status of workers from employees to independent contractors, when no conditions of the job shifted, they should go back to their original designation, said Mark Stapke, partner in Santa Monica, Calif.-based Stapke Law.
While there’s still much more to be learned, and many gray areas to explore, Stapke knows one thing: Classifying individuals as independent contractors may be a hard sell unless the relationship clearly conforms with the ABC test.
“We can expect that, in closer cases, the inclination of courts to [validate] independent contractor status is going to be less than it was before,” he said. “That’s really the impact.”