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New guidelines for independent contractors forcing businesses to restructure

Why businesses have to restructure after new guidelines for independent contractors.

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Bottle and Barlow barbershop had to restructure after new guidelines for independent contractors.

When shop owner Anthony Giannotti came back from vacation, he said he lost his entire staff because of the changes.

"The big kicker for independent contractors is that you cannot classify somebody as an independent contractor if they offer the same service as the same business of the business," Giannotti said. "So, if I'm structured as a barbershop or a salon, I cannot hire an independent contractor, barbers, or hairstylists."

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Giannotti said he can hire barbers as employees, but it will cost more, which is why customers will be impacted.

"There's gonna be a lot of shops that close," Giannotti said. "It's gonna open the door for a lot of corporations that are already structured this way and have the money to come in and take over establishments. Ultimately it's gonna raise the prices of everything."

The California Supreme Court made it harder for employers to classify their workers as independent contractors after a civil action lawsuit. In the lawsuit, a company faced allegations of misclassification of its delivery drivers as independent contractors rather than employees.

In order to prove a worker is an independent contractor, an employer would have to go through an ABC test.

In the lawsuit it says:

  • That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.
  • That the worker performs work that is outside the usual course of the hiring entity's business.
  • That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Andre Pichly works in a recreation department in Elk Grove. He says he can anticipate the changes for people who work in the department.

"Now, the way this is set up, we would have to hire them as employees," Pichly said. "What we run into is, do we bring people on payroll? Do we do all this stuff? They're only working this amount of time. It costs money to hire somebody to put someone on the books."

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The Labor Commissioner's office cited a nail salon in Temecula for mis-classifying and failing to properly pay their employees. The Labor Commissioner's Office cited them with $1.2 million in wage theft citations.

Bottle and Barlow will be holding a seminar for independent contractors. It will be hosted by the Meyer Law Offices on Sept. 16 at 5 p.m. to help understand the new regulations.

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