Independent Contractor Laws and Regulations: What Employers Need to Know

How Independent Contractor Law Changes Affect Gig Workers

优步司机拼车
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 盖蒂图片社/ LPETTET

What’s the difference between an 员工 and an independent contractor (IC)? Trying to make this determination has been an ongoing battle on both the state and federal level. With the rise of the gig economy, this issue has become even more difficult. 加州, 例如, is at the forefront of a legal battle over how Uber and Lyft 司机 should be classified, 和美国.S. 劳工部 (DOL) is reconsidering its worker classification system. 

独立承包人和. Employee-Why重要

痛单位的 and the Internal Revenue Service (国税局) consider the 集成电路与. 员工 issue a “misclassification” problem, meaning that 员工s are being misclassified as contractors. State and federal laws and the federal courts assume that the worker is an 员工; if the employer incorrectly classifies the worker as an IC, the worker loses the benefits due to 员工s.

Businesses tend to classify workers as ICs because they are cheaper (no benefits to pay) and the relationship can be broken more easily. 

Major Issues With Misclassification of Workers as Independent Contractors

  • They aren’t covered for minimum wages, 加班, 退休福利, 以及其他劳动法律保护.
  • They aren’t usually eligible for unemployment insurance or workers compensation. 
  • They aren’t covered under anti-discrimination, OSHA, other employment laws.
  • 他们必须自己支付 业税 (社保/医保). (注:作为IC, you can deduct half of the total when figuring your adjusted gross income, but you can still count the full amount for benefit purposes.)

Businesses that misclassify workers as ICs instead of 员工s can be subject to fines, 处罚, 偿还雇佣税, imprisonment by federal or state agencies.

On the other hand, some workers, like ride-sharing 司机, enjoy the freedom of being 自由职业者, choosing where and when they work, deducting expenses to reduce their taxes. 

联邦法律 and Regulations for Independent Contractors

365Asia 认为ICs as separate businesses in a contractual relationship with a hiring company. 国税局的规定遵循一套 普通法规则 (行为, 金融, type of relationship) in making a determination on worker classification for tax purposes. 

痛单位的, 与此同时, sets rules for determining worker classification for the purpose of benefits and work rules. These rules don’t use the common law test used by the 国税局. In 2019, the DOL issued an opinion letter stating that workers employed by a “virtual marketplace” company (including transportation and delivery services) are ICs, 没有员工. 

9月, 2020, the DOL announced a proposed “economic reality” test to determine whether a worker is an 员工 or IC. 测试有两个核心因素: 

  • The nature and degree of the worker’s control over the work
  • The worker’s opportunity for profit or loss based on initiative and/or investment

It also looks at several other factors, including: 

  • The amount of skill required for the work
  • The permanence of the working relationship between employer and 员工
  • Whether the work is part of an integrated unit of production

国家法律法规 for Independent Contractors

Workers can be considered 员工s under state law even if they are not considered 员工s under federal law, several states have more strict definitions for ICs.

有些州,包括 佛罗里达, 爱荷华州, 密歇根 use the 国税局 common law test (or a variation) described above. 

其他国家,包括 加州, 新泽西, 维吉尼亚州, use a more restrictive worker classification test called an 美国广播公司(ABC)测试

The 美国广播公司(ABC)测试 considers a worker to be an 员工 unless all of the three criteria are satisfied: 

A: The worker is free from control and direction of the hiring entity

B: The worker performs work outside the entity’s usual course of business

C: The worker is customarily engaged in an independent trade, 占领, or business of the same nature as the work performed for the hiring entity

As of October 2019, 33 states had implemented the 美国广播公司(ABC)测试 or a slight variation of it. Check with your state’s labor department for information on its test for classifying workers. 

Classification of Ride-Hailing Drivers

Ever since ride sharing became more prevalent in the late 2000s, states have been dealing with issues of driver classification, the increase in unemployment has escalated the argument. App-based ride-sharing companies like Uber, Lyft, Doordash have maintained that 司机 are 自由职业者 ICs. 

The classification issue has been playing out in various regulations and lawsuits in recent years.

2019年4月, the 国家劳资关系委员会 (NLRB) ruled that Uber 司机 are ICs and they are not protected under the National Labor Relations Act (meaning, 他们不能形成工会). 

2020年7月, Uber 司机 and the New York Taxi Workers Alliance successfully sued New York state and city officials for failing to pay unemployment benefits. The New York 劳工部 had previously determined that the 司机 were 员工s of Uber for those benefits. 

加州, 与此同时, has been engaged in legal battles with Uber, Lyft, other app-based rideshare companies over the status of their 司机. Effective January 1, 2020, 加州 议会条例草案(AB) 5 made the 美国广播公司(ABC)测试 officially part of state law (it was previously part of a court case). The ride-sharing companies refused to comply with the law (AB5), a 加州高等法院 judge ruled in August 2020 that “ride-hailing 司机” of Uber and Lyft couldn’t be classified as ICs.

The companies retaliated by putting a referendum, 命题22, 11月1日. 2020人投票. 的命题, which was ultimately approved by 加州 voters, allows app-based transportation (rideshare) and delivery 司机 to be defined as ICs in 加州.  

命题22 is an exception to the 美国广播公司(ABC)测试 for a specific type of worker, only in 加州; all other classifications of workers in 加州 must comply with the provisions of AB5. 

Other states have addressed this issue in different ways: 

  • 佛罗里达 classifies ride-sharing 司机 as ICs. 
  • Oregon classifies these 司机 as 员工s.
  • The Pennsylvania Supreme Court has ruled that an Uber driver should be considered an 员工.
  • Massachusetts filed a lawsuit in July 2020 against Uber and Lyft, seeking a court ruling that these 司机 are 员工s under the state’s wage and hour laws. 

独立承包商法律可能有所不同

让事情变得更复杂, different federal agencies and states have different criteria for ICs for different types of situations. 例如, someone can be classified as an IC for labor law (Fair Labor Standards Act) purposes, but be classified differently for tax and state law purposes. 

If there’s a conflict between federal and state law, you must comply with the law that applies a stricter standard for ICs and is more protective of workers’ rights. 

In addition, each situation is judged on a case-by-case basis. 美国.S. Supreme Court has indicated that it’s the “total activity or situation which controls,” and state and appellate courts also may rule differently in specific situations. 

Independent contractor laws and regulations are changing, due in part to the increase in remote workers, 司机, 失业福利问题. If you aren’t sure if your workers are classified correctly, discuss your situation with your attorney, or get a ruling from federal and state entities.