worker classification

HAVE INDEPENDENT CONTRACTORS IN CALIFORNIA? YOU MAY NEED TO RETHINK THAT.

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Photo Credit: iStock.com/utah778

Written by Jeremy Mittman, Jeffrey Davine, Robert Lowe, Susan Kohn Ross and Samuel Richman 

On September 18, 2019, California Governor Gavin Newsom signed into law A.B. 5, codifying the “ABC test” adopted in the California Supreme Court decision, Dynamex (see, e.g. prior posts here, here, and here) and ensuring that most California workers should appropriately be classified as employees instead of independent contractors.  The bill goes into effect January 1, 2020.

Though supporters state that the bill is aimed primarily at the so-called “gig economy,” in reality A.B. 5 affects virtually every type of business in California.

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Is Everyone Now an Employee in California?

By Jeffrey Davine

On April 30, 2018, the California Supreme Court issued its opinion in Dynamex Operations West, Inc. v. The Superior Court of Los Angeles County.  It is likely that this case will drastically alter the landscape in California as to how workers are classified.  From a tax perspective, the result could be significantly increased costs and administrative burdens for businesses operating in California.

Worker Classification.
For tax purposes, workers are divided into two categories- employees and independent contractors.  The tax withholding and reporting obligations with respect to each category of worker are substantially different and significant dollars can turn on how a worker is classified. (more…)