CAHU wants to make you aware of a recent California Supreme Court ruling, Dynamex Operations West Inc. v. Superior Court (Dynamex) that could require many 1099 independent contractors to become W-2 employees. This could directly impact you as an agent/broker and affect independent contractors you hire.
Dynamex created a new worker classification standard referred to as the “ABC Test,” to determine whether a worker is an independent contractor or an employee. Under this new rigid “ABC test,” EVERY person will be considered an independent contractor only if the hiring entity can PROVE ALL THREE of the following:
(A) That the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the 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.
CAHU is alarmed because agents could be required to become a W-2 employee for every single insurance carrier they contracted with or are appointed.
You should be aware that Dynamex will not be appealed, and is the law now. The court has refused to rehear the case which is unclear in terms of impact and retroactivity. The new standard could potentially reach back four years which could financially destroy an agency/company that was fully compliant in operating under the previous standard of an Independent Contractor. This is because California’s Labor Code Private Attorneys General Act provides statutory penalties.
CAHU has partnered with over 100 other associations to seek a legislative solution but key decision makers need to hear from you! This could negatively affect your commissions, ability to serve clients, ability to work independently and impact your tax reporting and deductions.
For more information or to sign-up and have your voice heard please visit https://imindependent.co to help stop this overreach from directly affecting your independence and ability to serve your clients!