The dust is nowhere near settled in the battle over independent contractors in California. In the latest development, the California Superior Court judge recently ruled that the voter approved law that allows GIG companies to classify their workers as independent contractors rather than employees is unconstitutional and unenforceable.
Prop 22, which was passed by California voters last November, allows certain “GIG economy” workers (app-based delivery and transportation drivers) to be classified as independent contractors instead of employees, provided the employer adheres to several requirements for paying the workers and carrying appropriate insurance, etc.
The ruling is the latest development in the year’s long fight over employee classification in California. The California Superior Court judge ruled, in part, that Prop 22 was unconstitutional because it infringes on the state legislature’s power to regulate worker’s compensation and is therefore unenforceable. The ruling will be appealed. The outcome of the appeal could set a national precedent as other states are in the process of introducing similar legislation.
Applicable GIG companies will not have to immediately reclassify their workers; however, Prop 22 will remain in effect for the time being, pending the outcome of the appeal. It does mention that most California companies do not fall under the Prop 22 exemption and should review their independent contractors’ classification (if any) for compliance with California law if they have not already done so. Prop 22 does have an impact on companies involved in the fire and burglar alarm industry as companies in the industry often utilize independent contractors as opposed to employees.
Readers should note that fire alarm systems, generally speaking, involve construction so that they are generally excluded and may have greater latitude in classifying their workers as independent contractors. However, burglar alarm companies may not be excluded as they may not be included in the classification of construction. Therefore, if alarm companies intend to utilize the services of independent contractors, they should make certain that they have a written agreement with the independent contractor, the independent contractor is a licensed company doing business with others and is not under the control of the alarm company. Bottom line, it is important to exercise caution in dealing with independent contractors.