California Cracks Down On Illegal Independent Operators
Cash-strapped California has once again began vigorous enforcement and penalties for operators using improperly classified Independent Contractors (IC’s). 2014 marked a year of significant new case law developed by California Courts.
I would think by now nobody is using this 90s business model for many reasons. The biggest reason being the “right to control.” I want full control over how our chauffeurs deliver service. The “right to control” issue defines whether a person is a contractor or employee.
The burden of proof belongs to the employer. The main test of status is whether the company has the right to control and direct the manner in which the service is delivered. This almost makes it a no-brainer. Of course, you are directing the manner in which the job is done. Do you control their attire? Do you control what time they arrive at the pickup location or even what is furnished in the vehicle? That’s control.
Here is a quick 10-point list of what might determine the relationship status:
- If the chauffeur is engaged in performing services distinct from that of the operating service.
- Whether the work is part of the regular business of both parties.
- Whether the company or chauffeur provides the vehicle and fuel.
- The chauffeur has an investment in the vehicle & operating expense.
- Whether the service rendered requires special skills.
- Is the work performed under supervision of any kind.
- The chauffeur has the opportunity to enjoy a profit.
- The length of time for each job.
- The degree of the permanence of the relationship.
- The method of payment.
If you are found to have misclassified your chauffeurs, you can suffer major ramifications. You may have to pay back taxes for all chauffeurs employed in the past five years with interest and penalties. You may also be required to pay past chauffeurs for wages owed with interest. If you have any doubt after reading this, contact a labor attorney for legal advice.
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