We invite you to listen to our Sound Business Insights Podcast, Episode 33 – Misclassification of Independent Contractors. Dan discusses changes in California law based upon the Dynamex decision and the impact this is going to have on employers in California with independent contractors. In this lively and candid conversation, Dan covers the new “ABC” test, as well as all of the draconian penalties which an employer will face if they misclassify a worker as an independent contractor.
Episode 33 – Misclassification of Independent Contractors comes firing out the door with an outline of the new ABC test. For the record, the ABC test, established by the California Supreme Court, requires any business, entity or individual providing work to a 1099 worker or independent contractor to prove:
- “that the worker is free from control and direction over performance of the work both under the contract and in fact.” and
- “that the work provided is outside the usual course of the business for which the work is performed,” and
- “that the worker is customarily engaged in an independently established trade, occupation or business.”
Dan addresses the immediate impact this test will have upon virtually any California employers with independent contractors, especially the second requirement. If the worker provides any work toward the central product or service of your company, or contributes to your company’s profitability, they must be classified (under California’s newly established guidelines) as an employee. Dan provides some examples in real life of how customers are taking advantage of contractors, knowing they are not in compliance with this new law.
Episode 33 – Misclassification of Independent Contractors goes through all of the penalties, interest, back taxes, back worker benefits and other expenses a California or San Diego employer will face if a California agency or the IRS deems they have misclassified employees as independent contractors. If you are a San Diego or Southern California employer with independent contractors working for you, we invite you to listen to our new podcast Episode 33 – Misclassification of Independent Contracts, review the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
