Mark Terman Comments on Holiday Hiring Challenges, Independent Contractors and New Laws Impacting Employers

In the article “New Laws, Labor Market Make Holiday Hiring Tougher In 2019,” Law360 reports on the staffing challenges for retailers, restaurants and other employers whose business booms around the holiday season. The legal industry publication writes that this year's holiday hiring surge is expected to prove particularly complicated because of a tight labor market and new worker-friendly laws.

Law360 turned to Labor and Employment partner Mark Terman for insight into the risks associated with employers classifying seasonal workers as independent contractors, as well as new laws granting workers paid sick time.

Independent contractors are workers who are in business for themselves and not for a boss — the plumber who comes in to fix a retailer’s pipes, for example, and not the cashier who staffs the register. Because these workers don’t enjoy the same protections as “employees,” they can be cheaper, which can be an attractive trait for a holiday hire. But classifying workers as contractors is risky, Terman said.

“It can be tempting for companies to seek the simplicity of independent contractor classification, but there are a parade of problems that can come [if] the contractor classification is not legally correct,” Terman said. Employers that misclassify workers as independent contractors and then deny them overtime pay may be hit with costly wage suits, for example.

Terman said these risks are especially acute given a recent trend of skepticism toward businesses classifying workers as contractors, most notably in California. Last year, the state’s Supreme Court adopted a new legal test that makes it harder for businesses to show their workers are independent contractors, and Gov. Gavin Newsom recently signed a law that codifies the decision and tweaks the test’s application. That law doesn’t take effect until January, but the decision applies now.

According to Law360, California’s new independent contractor law is not the only new measure of which employers should be aware.

Terman noted that several states and cities have recently adopted laws making businesses give workers paid sick time. Some of these laws allow workers to accrue leave starting from their first day, although they generally require workers to work for a certain amount of time before they can take it, so the measures don’t necessarily apply to seasonal hires.