The present ruling by the Supreme Court of California has changed the laws in which the employees were put under the label of independent contractors. As there is no set definition devised for ‘independent contractor,’ it purely depends on a particular area of law. Like, if there is an issue with the wage claim and employment status becomes questionable, then Division of Labor Standards Enforcement or DLSE will use the ‘five-prong economic realities test’ to give a decision. If you are not aware of some of the proceedings, it is advisable to contact a Certified Public Accountant in Burbank, California.
Significant Proceedings under the Californian Law
Until 2016, there were nearly 8.4% of the independent contractors, which means nearly 12.5 million people were recognized as the independent contractors by the businesses. The recent changes carried out by the court have made it difficult for employers to classify the workforce. For this, the employers and employees both can take assistance from the experienced CPA to understand the changes. Let us see some of the important proceedings:
- Analyze and research the working relationship before its establishment. If there is a problem in the pre-assumption of the status, then the worker is recognized as an employee by DLSE under the Labor Code Section 3357.
- To be recognized as an independent contractor, the employer has to show that the worker is not under the control of a core business. The person independently engages in the trade or business.
- A few cases were put up in the court where the employers have an agreement signed from the employees that they are independent contractors. This means they were not given minimum wages, meal periods, rest time, or any kind of overtime. In this scenario, where a written agreement has been made to sign does not make a particular worker an independent contractor. The Labor Commissioner and the Court determine it only after analyzing the facts.
- The employers who are not able to understand present changes in the Californian Laws regarding employees v/s independent contractor status can take the advice from Tax Accountant in Burbank, CA. It is important to understand the facts based on which you are establishing a relationship with a particular worker. The reason being, in case of any dispute, the DLSE will presume the worker to be an employee only.
To sum up, as there is no concrete definition provided for independent contractors, the employees and employers must seek the nature of a job before establishing any relation.
