A newly identified “job killer” bill will be heard in the Senate Judiciary Committee on May 7.

SB 556 (Corbett; D-San Leandro) completely ignores the legal significance of the independent contractor relationship and imposes liability on any contracting entity for the damages caused by the contractor or contractor’s employees – including wage-and-hour violations, penalties, fines and willful misconduct – solely on the basis that the contractor or its employees wore a uniform similar to that of the contracting entity or drove a vehicle with the contracting entity’s logo.

The independent contractor analysis is a daunting task for any business. The three state agencies (Employment Development Department, Franchise Tax Board, and Division of Industrial Relations) that determine whether a worker has been properly classified as an employee versus an independent contractor use three different tests that result in different determinations.

Each test includes extremely subjective factors that can easily be interpreted either in favor of or against the classification of an individual as an independent contractor. One key factor that is present in all three tests is the degree of control the entity retains and exercises over the independent contractor or its employees.

If the entity exerts too much control, the individual and its employees may be the employees of the contracting entity and therefore liable for the wages, taxes, and insurance of those individuals.

Read here for more detailed coverage of SB 556 and how it could impact California employers.

Author: Gail Cecchettini Whaley

HR Watchdog, HRCalifornia’s Employment Law Blog, © California Chamber of Commerce