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California Supreme Court Transforms the Test for Who Is an Employee

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Re: California Supreme Court Transforms the Test for Who Is an Employee

#31

Post by ddingus »

jMyles wrote: post #9
taurath wrote: post #2

It’s interesting how even within companies a hard set social hierarchy has taken place between employees and contractors. The contractors tend to perform the exact same duties as employees, but are usually paid less, have worse future prospects (companies tend to like to hire from full time to full time), worse benefits and generally don’t get most of the perks of being an employee. For coders, is this because they’r…

I'm not sure this is a very good read, especially in the startup scene. I have been in a position (for which I'm super grateful) in which young startups didn't have the funds to pay me my full-time rate, and so instead chose to pay me a weekly rate to work one week out of the month. I like to believe that I provided substantial value in that configuration - usually landing to review code, mentor newer programmers, an…

Honestly, yours is a GREAT read.

That's a very solid case for contractors and almost nobody will have a meaningful problem with it. I've done similar things in the CAD / data management space.

A person with outside perspective, rare skills, experience, and most importantly, is the outside voice able to bring real options to the table along with production proven, time tested ways and means, is worth every penny.

The full time peeps should be taking you out for a lunch or two to network and gain some easy, high value mentoring, contacts...

I would in a second, and have had others invite me for this kind of thing. Some have remained in touch for years, and as they grew, have helped me as I did them.

If we had more of that going on, it would benefit nearly everyone.

But we don't.

The majority case boils down to head count quotas, and cost of labor factors. Often, these are both under specified, leaving managers to find contractors to fill gaps. The larger companies do this and it's chronic.

Re: California Supreme Court Transforms the Test for Who Is an Employee

#33

Post by kelukelugames »

BurningFrog wrote: post #26
taurath wrote: post #2

It’s interesting how even within companies a hard set social hierarchy has taken place between employees and contractors. The contractors tend to perform the exact same duties as employees, but are usually paid less, have worse future prospects (companies tend to like to hire from full time to full time), worse benefits and generally don’t get most of the perks of being an employee. For coders, is this because they’r…

There are two distinct classes of contractors. - Those who aren't good enough to get a full time job. - Those who are too good to settle for a full time job. The two groups are treated quite differently.

Hahaha, I saw someone in the hallway wearing a contractor badge and a MIT hoodies. I am an alum so I asked about their time there. They said they graduated in 2003 but started in 91. I said, "Woah that's one helluva of a PHD." Turns out, they took a 10 year gap to play blackjack. Now they just work for fun every couple of years because they otherwise get bored.

https://en.wikipedia.org/wiki/MIT_Blackjack_Team

Re: California Supreme Court Transforms the Test for Who Is an Employee

#34

Post by hardwaresofton »

Here is the new test (the ABC test if you're into unnecessary pet names for things):

> If A, B, or C isn’t present, the worker is considered an employee.

> A. Freedom from control over how to perform the service

> B. Service is outside the business' normal variety or workplace

> C. Worker is engaged in independently established role

So if any one of those conditions isn't the case, you are an employee under the law. I see people in this thread wondering how it'll affect companies like Uber/Lyft/whatever -- and I think it will actually be good for them, because now they'll use some of that warchest to hire the the best lawyers to figure out exactly how to best navigate the law (in california at least), and write their contracts in whatever way that best makes sure all 3 are present and they still get a healthy supply of drivers. Other smaller gig economy companies will then follow that lead so they can stay afloat and not purchase the legal work done by Uber/Lyft.

If I was invested in Uber/Lyft, I would welcome this, because it removes an avenue of risk, stabilizing the lawsuit risk.

[EDIT] - In the article there's a link to the decision from which the test comes from:

https://www.bloomberglaw.com/public/desktop/document/Hargrov...

Re: California Supreme Court Transforms the Test for Who Is an Employee

#35

Post by greglindahl »

justboxing wrote: post #15
greglindahl wrote: post #13

Earlier quoted context omitted.

This does sound like it would affect "try before you buy", unless the contractor has significant other work. Does anyone actually do "try before you buy" in California? It doesn't work in a hot job market, and the job market is currently hot.

> Does anyone actually do "try before you buy" in California? Yes. It's called C2H - Contract to Hire. Over 2,000 Tech Jobs in CA that are C2H on Dice.com https://www.dice.com/jobs/advancedResult.html?for_one=&for_a...

Just because there are openings doesn't mean it is frequently done!

Re: California Supreme Court Transforms the Test for Who Is an Employee

#36

Post by WalterBright »

taurath wrote: post #2

It’s interesting how even within companies a hard set social hierarchy has taken place between employees and contractors. The contractors tend to perform the exact same duties as employees, but are usually paid less, have worse future prospects (companies tend to like to hire from full time to full time), worse benefits and generally don’t get most of the perks of being an employee. For coders, is this because they’r…

Back when I worked at Boeing, contractors got paid about double what the full time employees did. But, they received no employee benefits (worth about 40% of the employees' salary, if I recall correctly) and could be let go at a moment's notice.

So in the end it worked out about the same.

If the law requires contractors to get the same benefits, etc., the result will be the contractors will get paid less. The ones I knew wanted the higher pay / no benefits circumstance, and they'd lose that option.

Re: California Supreme Court Transforms the Test for Who Is an Employee

#37

Post by greglindahl »

scrumbledober wrote: post #19
greglindahl wrote: post #13

Earlier quoted context omitted.

This does sound like it would affect "try before you buy", unless the contractor has significant other work. Does anyone actually do "try before you buy" in California? It doesn't work in a hot job market, and the job market is currently hot.

I'm currently working as a contract to hire in SF

Do you think you know why the position was structured like that? And did you have other non-contract job offers? Not trying to put you on the spot, just wondering about the details.

Re: California Supreme Court Transforms the Test for Who Is an Employee

#38

Post by greglindahl »

cft wrote: post #23

How will this affect the tax? The main difference between a 1099 contractor and a W2 employee is in the payroll and social security/medicare tax requirements. But these tax requirements are federal and this is a CA only decision.

Last I worked on a 1099, the total tax amount was roughly the same, the difference was who paid it.

Re: California Supreme Court Transforms the Test for Who Is an Employee

#39

Post by [deleted] »

taurath wrote: post #2

It’s interesting how even within companies a hard set social hierarchy has taken place between employees and contractors. The contractors tend to perform the exact same duties as employees, but are usually paid less, have worse future prospects (companies tend to like to hire from full time to full time), worse benefits and generally don’t get most of the perks of being an employee. For coders, is this because they’r…

[deleted]

Re: California Supreme Court Transforms the Test for Who Is an Employee

#40

Post by forapurpose »

jMyles wrote: post #14

Ouch. Some of my favorite gigs I've ever performed aren't possible under this standard. I question whether this will actually benefit contractors, but I have no doubt that it will benefit bigger, established players who already have full-time cadres.

> Some of my favorite gigs I've ever performed aren't possible under this standard.

Let's not assume that because the cost to the employer goes up, they will drop all the former 'contractor' positions. Employee rates are based on what the market will bear, subject to law and regulation; they are not based on 'cost-minus' - cost to the employer, minus a profit. Using a very simple case of the cost and benefit: If the employer can hire you for $10/hr, they will, regardless of whether they make $20/hr or $200/hr from your labor; if the law increases your rate to $15, they still will employ you. Of course, if they only make $9/hr from your labor, they won't hire you at $10/hr in this simple theoretical case. Reality is more complex: They may be happy to absorb the loss for other reasons, such as completing a major project, pleasing an important client, acquiring or maintaining market share, developing talent, your compromising photos of the boss, etc.

It's similar to the mistake people make about pricing: They assume goods are priced at 'cost plus' - the seller's cost plus a profit - and that therefore if the seller's cost increases then the price must also (businesses encourage this misconception - 'if regulations increase our costs, then everyone will have to pay more!'). Really goods are priced based on what the market will bear. That is, goods are priced as high as possible (i.e., at the level which maximizes profit). If they can charge you $10,000 for an item costing them $100, they will. If they have to charge $50 for it, they will do that too; $50 is better than nothing. If their costs change, it doesn't change what the market will bear.

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