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Misclassification and regulatory changes on the state level (and what they mean for service companies)

November 29, 2022

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In September 2020, California signed into law Assembly Bill 2257 (formerly AB5), which restricted the classification of an independent contractor to those individuals able to meet all three requirements of an “ABC” test.

According to the law, in order for a worker to be classified as an independent contractor, they must:

A) Be free from the control of the company they are working for,

B) Perform work that’s outside the course of the company’s usual business, and

C) Have their own independently established trade, occupation, or business.

Like California, other states have developed their own nuanced versions of this ABC test.  The following are some of the states that have passed their own versions of ABC legislation, all of which closely resemble the California law:

Tips for navigating the changing regulatory environment

As the regulatory environment continues to evolve, here are some DO’s and DON’Ts to guide your usage of independent contractors through a platform like Field Nation:

  • DO specify a clear beginning and end date for any project
  • DO have a well-defined scope of work for any contract assignment
  • DO pay contractors on time and offer a fair and competitive rate.

 

  • DON’T post assignments that are 40+ hours per week with set hours
  • DON’T post long-term assignments that last consecutive weeks or months
  • DON’T require providers to work exclusively with you without the ability to do other work
  • DON’T provide training on how to do a job in its entirety
  • DON’T provide all the tools necessary to complete the job

New regulations are an opportunity to assess your risk. If you are unsure of whether the work you are asking to be performed or the applicable worker classification violates your state’s legislation, we highly recommend consulting with legal representation to determine the best path forward for your business.

The material on this site is intended to be informational only. It is not legal advice or guidance. Readers should contact their attorney to obtain advice with respect to any particular legal matter. We will continue to make every effort to keep the above list of states with ABC laws in place updated, but cannot guarantee that the above list is comprehensive.