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Earlier this summer, Georgia Governor Brian Kemp signed House Bill 389 (Act 809) into law, altering the scope of many employer-employee relationships. This law is likely to reclassify many independent contractors as employees.
What does this mean? The distinction between employees and independent contractors generally boils down to an issue of control. Generally, an employer assumes the right to control the time and manner of work executed by employees, but not necessarily by independent contractors. Act 809, however, expands the definition of employment to include “services performed by an individual for wages”. This is important because it expands the category of workers who may be able to claim unemployment benefits. In addition to employer control, the nature and scope of the individual’s work will now be considered to determine whether employee benefits are available to them. The following seven factors will be considered:
Ability to hold other employment at the same time
Freedom to accept or reject work assignments
Whether a minimum number of hours worked or sales completed must be met
Discretion to set his or her own work schedule
Whether direct oversight or supervision over the work occurs
Existence of territorial or geographic restrictions
Whether there exists a requirement to perform, behave or act in a manner related to the performance of services for wages
More workers will likely be classified as employees eligible for unemployment benefits in light of these new considerations. This opens the door to new obligations and potential liability for Georgia employers. Act 809 provides a sliding scale of civil penalties if an employee is classified incorrectly. This scale takes into account the size of the employer. Additionally, Georgia's disability discrimination law and many other employment laws do not clearly define who qualifies as an employee. With damages on the line, courts are likely to look to the expanded definition of employee under Act 809 to determine liability. Laws that govern wage-and-hour requirements and recordkeeping are also likely to be affected by the expanded definition of ‘employee.’
The continuing tug-of-war: Georgia has also enacted a new, employer-friendly law, SB 331 (Act 823), in May 2022. This law limits the enforcement of local rules regarding work hours, scheduling and work output. The resulting contradiction between state and local governments may happen again with Georgia's new attempt to preempt local rules on workplace conduct, as they apply to the new expanded category of employees. As this employer-employee balancing act continues, stay aware of your rights as an employee or an independent contractor to ensure you are receiving the benefits you’re entitled to under Georgia law.
