ATTENTION Business Owners Who Hire Independent Contractors.
This important update impacts all Georgia business owners. On July 1, 2022, a new law (HB 389) concerning Unemployment Insurance went into effect. HB 389 reclassified many independent contractors as employees, which triggered a host of liabilities and obligations for Georgia employers.
HB 389 redefines employment to include any individual (even those paid as 1099s) who receives wages or services, unless the individual is truly free from control or direction over the performance of such services. Businesses are therefore required to pay Unemployment Insurance premiums for these individuals, and failure to do so can trigger various penalties.
The newly minted HB 389 redefines employment and requires Unemployment Insurance premiums to be paid for any individual (even those paid as 1099s) who receives wages or services, unless the individual is truly free from control or direction over the performance of such services. HB 389 further provides the following criteria for determining whether an individual is free from control or direction, as demonstrated by whether the individual:
Is not prohibited from working for other companies or holding other employment contemporaneously;
Is free to accept or reject work assignments without consequence;
Is not prescribed minimum hours to work or, in the case of sales, does not have a minimum number of orders to be obtained;
Has the discretion to set his or her own work schedule;
Receives only minimum instructions and no direct oversight or supervision regarding the services to be performed, such as the location where the services are to be performed and any requested deadlines;
When applicable, has no territorial or geographic restrictions; and
Is not required to perform, behave, or act or, alternatively, is compelled to perform, behave, or act in a manner related to the performance of services for wages which is determined by the Commissioner of Labor to demonstrate employment, in accordance with this Code section and such rules and regulations as the Commissioner of Labor may prescribe; and Such individual is customarily engaged in an independently established trade, occupation, profession, or business.
Blue Sky Law is able and eager to assist Georgia employers who need to determine whether their contractors should now be classified as employees for Unemployment Insurance purposes.
In response to the new amended HB 389 (Act 809) law, Blue Sky Law Attorney, Barton Black warns—"The Act drives home the risk that contractors pose to Georgia employers. To comply with the Act, Employers should seek the assistance of employment counsel to review the roles and responsibilities of any contractors and determine whether unemployment insurance premiums should be paid for any such contractors. Employers should err on the side of caution and place contractors on their unemployment rosters in order to stay off the Department of Labor’s radar.”
In an effort to ensure your business is compliant, call Blue Sky Law and speak with an attorney.
