California’s #1 Rule: The Law of Unintended Consequences
Truly, the only law that California’s politicos in Sacramento follow to the letter is the one related to unintended consequences.
By way of background, this spring the California Supreme Court changed the way independent contractors are classified in this state. The court-mandated approach makes it much more difficult for employers to put employees under that label.
The April 2018 court ruling now says workers are assumed to be employees unless all three of these factors can be proven:
(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
There are about 2 million workers in this state who would normally be considered “independent contractors” in states’ in which laws are based on reason and sanity. Among those workers are those who provide services in beauty parlors and barber shops.
The impact is already being felt in Sacramento, as one barber shop has lost all seven of its service personnel.
The work doesn’t stop at Downtown Sacramento’s Bottle and Barlow, even if it became a one-man shop.
“I lost my entire staff,” said owner Anthony Gianotti.
…Historically, the cosmetology industry, which includes barbers and hair stylists, have been classified as independent contractors, but that won’t be the case anymore. Gianotti explains the new rule.
“That you cannot classify someone as an independent contractor if they offer the same service that is the primary business of the business.”
The consequence of this new rule, then, is that a barber, hair stylist, or other personal care professionals can no longer work in a barbershop, beauty parlor, or similar establishment as an independent contractor, where they typically set their own hours and arrange for their own pay. Instead, they are forced to become employees of the business on an official payroll.
The reclassification was driven by the exploding number of independent contractors in the state, which was motivated by employers trying to manage ever-increasing labor costs. The California Supreme Court adopted its 3-pronged requirements from a standard used in 22 other states. However, all of those states adopted their regulations through the legislative process, not the courts.
[Allan Zaremberg, president and CEO of the California Chamber of Commerce] said all but one of the states also have a broader B factor that an includes an “or,” allowing workers to perform a similar function as the hiring company’s “usual course” of business if it is at a different location.
Business groups are now asking the Legislature to a conduct a public review and update of California’s wage orders, which are more than a decade old, to clarify industries that should be exempt from employee classifications because don’t they fit the model anymore.
Senate President Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon did not pursue the change as the Legislature finished work for the year.
Republican gubernatorial candidate John Cox has a theme, #HelpIsOnTheWay, which seems timely in the wake of this developing employment-based crisis. It sure seems the other branches of the state’s government will be offering none.DONATE
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