If your company has been paying attention to today’s labor laws, then you know that there’s nothing straightforward about them. If you thought that labor laws were complicated before, they’re about to get even trickier to navigate. The newest trend is focused on individual states who are taking it upon themselves to pass and enforce their own, different labor laws. This creates a granular level of compliance at the state and local level on top of all of the federal compliance laws that businesses need to be following already when it comes to classifying and paying their workers.
In the future, it looks like more and more states will be drafting their own legislation. What adds that extra level of complexity is the fact that some states have chosen to crack down on compliance while other states are sitting it out entirely. California has indicated that major changes are happening when it comes to their own state compliance, whereas other states aren’t even considering passing similar legislation. Showing just how varying these laws will become down the line.
The result is an ever-changing world of ‘micro-compliance’. Now, instead of following one set of rules across the country, companies need to pay attention to the state and even city laws for everywhere they are operating their business. Those who don’t stay up-to-date with compliance and payment laws can find themselves on the messy and expensive side of a lawsuit. And it’s not just the workers who are filing these lawsuits, it’s the cities and the states themselves.
What happened to Handy?
Last week, the city of San Francisco filed for a temporary injunction against the home services marketplace Handy. The city sued Handy in March over its worker classification practices, arguing that according to California’s strict AB5 law, the workers using Handy’s platform needed to be classified as employees rather than contractors.
Handy had originally argued that they are just a referral service, connecting cleaners and repair workers to customers. However, since the platform exerts a high level of control over its “pros,” mandated an orientation, and controlled the jobs they receive, a judge determined that the app-based platform does not meet the requirements necessary to classify their pros as independent contractors under California law.
You can read more about this recent ruling here: Handy Must Treat Workers as Employees, San Francisco Tells Judge
What does this mean for my business?
Handy is left with two options, they can change the way they do their business and re-classify all of their workers, or they can stop doing business in California altogether. A costly proposition either way and one that other executives do not want to find themselves in. This ruling has no doubt caused many companies to rethink their business models and how they work with their labor pool.
When it comes to the future of your own company, you need to be prepared and pay attention to not only the current law, but what the law is evolving into. As the laws become more complicated and ‘micro-compliance’ becomes more of a reality, it makes sense to leverage an external company to take on that classification burden for you.
At AllWork, we help companies of all sizes navigate this world of employee classification. We’re here to ensure that businesses are always in compliance with all state, federal, and even individual city laws.