For those thinking that classifying workers as independent contractors is a cheaper way of doing business, beware. A California court just ordered a home healthcare business to pay $10 million dollars in restitution and civil penalties for misclassifying its home care workers as independent contractors. The judgment in the case states that the company already was on notice for the misclassification and also had represented to its customers that the workers were actually employees. The misclassification resulted in loss of overtime pay to the workers, loss of workers’ compensation coverage and benefits, and loss of various tax withholdings that were for the benefit of the workers and the state.
We blogged recently on the relaxation of the federal independent contractor test under the Trump administration. This is the Department of Labor test that applies to the Fair Labor Standards Act for federal wage issues. As we stated in that post, however, there are other tests for issues arising under other agencies and for issues arising under state law. This California case is a good reminder of the danger of ignoring state law.
The California test is simpler and arguably more employee-friendly than most other tests, but it is a helpful guide even if it does not apply to you. It is called the “ABC Test.” Under this test, for a worker to be an independent contractor, all three of these criteria must be met:
Mumbai, Parents who have lost their young son in a railway accident will not use such a tragic incident to make a false claim of compensation, the Bombay High Court said on Friday, granting relief ...