Employment status: does California show the way?

This month in California, ride-sharing and delivery platforms succeeded in their campaign - supported with $30million each from DoorDash, Lyft, and Uber - to win a public ballot exempting their drivers from the California law passed last year which would have required them to treat their drivers as employees rather than contractors.

This has received a lot of attention, particularly in the UK as the Supreme Court decision on the employment status of Uber drivers is imminently expected.

In the noise, an important point seems to be have been overlooked: the rest of the California legislation still stands and this limits the circumstances in which individuals can be classified as independent contractors. For example. a software development company in California has to treat an individual software developer as an employee even if they agree to be engaged on a self-employed basis, unless they perform work that is outside the usual course of the hiring entity’s business.

This goes beyond the UK changes to IR35 from April 2021. However, it underlines something vital which comes with those changes : individuals who are being taxed as employees will expect to be treated as employees. Businesses may see this as additional cost and commitment but it cuts both ways.  Employees earn less than contractors’ daily rates and have to commit to the business. it is possible for businesses to use this to their advantage in terms of delivery and talent retention.

For advice about off payroll working, employment status and onboarding, contact our specialist team.