On May 2, 2022, Georgia Governor Brian Kemp signed a new law to amend the definition of employment for independent contractors. It took effect on July 1, 2022, and reclassified many independent contractors as employees. Georgia also enacted an employer-friendly law restricting counties and cities from enforcing local rules regarding work output, work hours, and scheduling.
The new laws are beneficial for independent contractors. However, they can cause confusion among employers who wonder whether they must comply with state or local rules.
Independent Contractors’ Rights to Unemployment Benefits
The law specifically applies to unemployment benefits. It amends previous provisions to include services an individual performs for wages in the definition of employment. Common law differentiates employees and contractors based on the element of control.
Typically, the relationship between an employer and employee involves a contract allowing the employer to control the manner and time of completing the job-related tasks.
After Governor Kemp signed the new law, the categories of workers who can claim unemployment benefits expanded. The existence of an employer-employee relationship now depends on the scope and nature of the person’s work instead of the employer’s control over the work.
Determining whether to classify an independent contractor as an employee depends on factors such as:
- No minimum work hours or, if in sales, no minimum number of orders to obtain
- No geographic or territorial restrictions
- Ability to maintain other employment or work for other companies simultaneously
- No requirement to act, perform, or behave in a manner related to performing services for wages
- A person’s discretion to set their own work schedule
- Freedom to reject or accept job assignments without facing consequences
- Receipt of only minimal instructions and no direct supervision or oversight of the services to perform, such as requested deadlines and where to perform the services
Penalties for Misclassifying Independent Contractors
Georgia employers can face severe consequences for unlawful classification. They must understand, critically evaluate, and document the decision to classify someone as an independent contractor or employee. The new law bases civil penalties for misclassification on the employer’s size.
The expanded definition of an employee might affect state laws regarding recordkeeping, discrimination, and wage and hour requirements. Misclassification can trigger various obligations and liabilities for employers. Besides unemployment benefits, the new definition can affect an employer’s tax remittance and withholding of federal unemployment, Social Security, and Medicare contributions.
Local Regulations for Private Employers
An amendment to state minimum wage laws under the Protecting Georgia Businesses and Workers Act prohibits local governments from enforcing or enacting local regulations on scheduling, work output, and work hours. The law restricts local governments from ordering private employers to abide by specific workplace parameters.
This act is one of many attempts by the state to prevent restrictive local laws. The Georgia governor issued an executive order during the Covid-19 pandemic to stop local governments from restrictions conflicting with relaxed standards enforced by the state.
Many cities responded by requiring businesses and residents to follow local restrictions to avoid fines and shutdowns. Employers faced challenges in deciding whether to comply with the local restrictions or depend on the state to preempt those restrictions.
Speak to a Skilled and Trusted Employment Attorney
The Vaughn Law Firm will protect your rights and fight for the compensation you deserve. Our years of combined legal experience allow us to handle the most complicated employment cases for clients in Washington, DC, and Decatur, GA.
If your employer misclassified you, resulting in lost overtime pay and benefits, call the Georgia employment disputes lawyers at 877-615-9495 or reach out to us online today for your free consultation.