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Know criteria before turning employees into contractors

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in Compensation and Benefits,Human Resources

Wouldn’t it be great if you could just turn your employees into independent contractors? That way, you wouldn’t have to pay unemployment compensation taxes, provide workers’ compensation insurance and so on.

But California courts are quick to zap employers that wrongly convert employees into contractors.

Recent case: An employer hired an outside firm to convert its drivers into independent contractors. The drivers ended up doing exactly the same work under the same circumstances as before, but the employer stopped contributing to the state unemployment compensation program.

The California Unemployment Insurance Appeals Board ruled that the drivers were still actually employees and assessed penalties. Now the Court of Appeal has ruled that the penalties stand. (Messenger Courier Association of the Americas v. California Unemployment Insurance Appeals Board, D053391, California Court of Appeal, 4th Appellate District, 2009)

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