Independent Contractor vrs. Employee status for 2012...

Wow!! It was only the ninth day if the year and people were already in an uproar over the new HR laws. The one in particular is the AB 459. Specifically, I heard rumblings that this is being used to only apply the independent contractor title and designation to people with a license.  Facebook was full of posts of people complaining that they have lost their contractor designation and were now temporary employees. Lets discuss this a bit shall we?

In the HR world, a temporary employee is really a seasonal employee, think Macy's during Christmas. This is not an independent contractor.  However during Christmas, Macy's does take out payroll taxes and follows labor laws.  This new law does not affect anyone other than independant contractors who receive a 1099 form.  If we read the AB 459, it says that there is a new penalty for will full misclassification of independent contractor between $5,000 and $25,000. In other words, this willfull misclassification is defined as "avoiding employee status for an individual by voluntarily and knowingly misclassified that individual as an independent contractor."  Do you see the problem? No where does it indicate that only licensed people can be classified as independent contractor and no where does it say that those who are not independent contractor must be classified as temporary workers.  Nor does it define what willfull misclassification is.  How do we apply a law that so far has so far yielded more questions than answers? Is this a ploy, as many have said, to force employers to put people on payroll?

So what do we do to keep up on how this law is going to affect us and our clients? We turn to education and networking.  The HR Firm  has attended several legal updates including one last week at Nordman Cormany Hair & Compton.  There are is now more information regarding how to determine if the person is truly a consultant or an employee. Three test to be exact. One for the IRS, one for the courts and one for the DOL. Now, more than ever before it is going to important for employers to have an HR professional on hand. Preferably one who is able to not only know the law but the limitations it sets.  Stay tune, as we delve into how this and many of the other laws will affect all California employers.

If you have questions about human resources or need consulting in the area of human resources, please contact me, Rosandra Esquivel, at rosandra@thehrfirm.com