California’s New Law and Worker’s Compensation Insurance

30 January 2020
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30 January 2020, Comments: 0

A controversial new law went into effect in California on January 1st, 2020.   California’s “Gig-Worker Law” makes it more difficult for businesses to treat workers as independent contractors.   As a result, more workers will now fall under the Worker’s Compensation Insurance coverage of their employer.

Under the new law, a worker is considered an Independent Contractor, only if he or she can satisfy 3 separate conditions:

(A) They must be free from control of the hiring entity

(B)  They must work outside the hiring firm’s usual business

(C)  They must have a business separate and independent of the hiring entity

If all three of the above conditions are not met, the person is considered an “Employee” of the hiring entity.   Being an employee, requires the hiring entity to cover that person under their Worker’s Compensation Insurance.

Obviously, the above law could have a major impact on a firm’s bottom line, especially if a worker’s compensation audit picks up payroll of previously classified IC’s, that a business owner was not expecting.

If you have questions of how this might affect your insurance, please do not hesitate to reach out to your insurance professional at Hatter, Williams & Purdy Insurance 760-795-2002.

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