Forbes reports how “misclassification cases can be devastating, especially for misclassified non-exempt employees, and can result in minimum wage violations, missed meal and rest periods, unpaid overtime, unreimbursed business expenses, record-keeping violations, steep penalties, attorneys’ fees, and even criminal liability, among other consequences. Misclassifying workers creates enormous risks for companies and is fertile ground for class actions and representative actions under the Private Attorneys General Act (PAGA).” See entire article.
The CPA Journal reports on IRS and Department of Labor focus on worker issues. Read more to find out if your company requires assistance or needs to reclassify or restructure staffing. Plaintiffs’ attorneys capitalize on the dilemma. “Not a week goes by without a published report of a newly filed class action suit, or the certification or settlement of such a suit, against a putative employer by individuals who were classified as ICs but who believe they should have been classified otherwise.” Details here.
Nellie Alkap’s write up in Small Business Trends describes how to survive doing business in California under controversial AB5. Businesses and independent contractors both take issue with the new law. It places extra burdens on employer and employee alike. Employers cover more than payroll taxes. They also pay worker’s compensation and employee benefits. These include health insurance, retirement and more. They also pay compliance expenses. When a company uses an independent contractor, the contractor takes on the burden of the 15.3% self-employment tax (7.65% employee plus 7.65% employer payroll taxes). The contractor then gets to deduct reasonable business expenses. What needs to be done? Read here.
Ford Harrison reports in JD Supra: In his 2020 budget proposal, Governor Andrew Cuomo proposed creating a 9-member marketplace worker classification task force to address seismic changes to the way independent contractors and other gig economy workers are classified. This task force will have until May 1, 2020 to propose legislation that addresses: wages; health and safety protections; specific categories of benefits; worker classification; criteria to determine if a worker is an employee; collective bargaining; anti-discrimination; opportunity; and privacy concerns. If the task force fails to make significant legislative proposals by May 1, 2020, the New York State Department of Labor will be authorized to promulgate regulations addressing these issues.
Governor Cuomo’s announcement follows a season in which multiple forms of legislation were proposed creating limitations on employer uses of independent contractor classification for workers. New York’s venture into the controversial terrain of regulating the gig economy follows on the footsteps of legislation passed in California and New Jersey. Read entire article.
For the last year, the advocacy group Californians for the Arts has been working to create exemption language for arts industries and educate the legislature on the common arts employment model, which is run largely on independent contractors. “In a highly creative industry, we’re really not the kind of employment models where you fit into this neat box,” said Julie Baker, Californians for the Arts’ executive director.
Converting an independent contractor to an employee typically increases staffing costs by 30%, said M.J. Bogatin, an attorney and board member of California Lawyers for the Arts. Those costs include insurance premiums, disability premiums, workers compensation, “a bunch of additional admin and the costs of now administering these people as employees.”
Those who fail to comply with the law face fines. Under AB5, if a court finds a company or small arts organization willfully violating the law, penalties may run from $5,000 to $25,000 per violation.
For arts organizations staying afloat on grants and donations, both options — paying a penalty or facing a 30% increase in costs — could be devastating. Read details here.
Truckers are forced to relocate to survive financial hardship. Freight Waves reports below:
California natives Jeff and Elyse Fink are still planning to relocate, but say a federal judge’s pause on the new sweeping labor law, AB5, that was set to take effect in January, has given them a little more time to plan their exit strategy.
“We are continuing with our plans to sell and relocate,” Jeff Fink told FreightWaves. “We want to be in a state that is truck friendly and California has proven to be an anti-truck state.”
The Finks, who currently live in Victorville, California, are team drivers leased to Long Haul Trucking of Albertville, Minnesota. In December, the carrier notified the Finks that they were not going to be able to dispatch them with loads leaving California unless they moved out of the state. Read entire article.
Read about California state court denying San Diego City Attorney Mara Elliot’s request for an emergency restraining order application to make all Instacart independent contractors employees as reported by the California Globe. Tuesday’s decision is expected to be challenged by the San Diego City Attorney’s Office again in the near future.
CA AB5’s first month has proved a catastrophe for scores of independent contractors who have lost income, longtime clients and, in some cases, their entire livelihoods overnight
Companies that misclassify independent contractors are now subject to increased fines and penalties. Can businesses afford $250 per employee for a first violation and up to $1,000 per employee for subsequent violations? To make matters worse, misclassified employees can be paid up to 5% of the worker’s gross earnings for the past year, and when you need to lay off workers to downsize, mandatory severance pay will break the bank. These major changes are effective immediately in New Jersey, read ReedSmith’s article here.
A federal judge has ruled that a jury should decide whether the ride-hailing giant Uber Technology, Inc., should be held responsible for injuries a passenger suffered while getting a ride from T.F. Green Airport to his hotel in 2017.
Ramifications of this case are key to the employee misclassification inquiries and lawsuits affecting employers nationwide.
Read Providence Journal’s Jan 26th reporting of the lawsuit filed in December 2017 stating the back seat passenger took Uber from the airport Sept. 25, 2017 when it collided with an abandoned car on a highway.