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November 12, 2020 3:00 PM, EST

Documentation, Clarity Essential for Contractors, Experts Say

Independent contractor kali9/Getty Images

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Experts stressed the importance of documentation and clarity for companies that work with independent contractors during a session at the Women In Trucking Association’s annual conference.

Deborah Stevens, chief compliance officer at Openforce, noted it is important to create guidelines for employees to ensure they have steps to follow when engaging and contracting with independent contractors. Stevens spoke during a session on worker misclassification held virtually Nov. 12. Openforce helps companies manage their independent contractors.

“You have to train your operations employees regarding their interactions,” Stevens said. “Put those things in writing and actually document and train your employees on how they can engage and how they should engage.”

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In addition to guidelines, Stevens recommended companies conduct internal audits of all current workers classified as independent contractors. Also, she said companies should rely on third-party groups for certifications, licenses, training and insurance coverages.

Claims related to misclassification vary in cost and in how long they take to process. Openforce CEO Wendy Greenland said claims related to civil class action are among the most costly, while wage/hour and unemployment claims generally are less expensive.

States rely on various tests to determine a worker’s status as an employee or a contractor. Stevens said the ABC test — or at least pieces of it — seems to be the most common. The ABC test dictates that a worker is considered an independent contractor if he or she is A) free from the control and direction of the hiring entity, B) performs work that is outside the usual course of the hiring entity’s business and C) is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.

Some states, such as California and Pennsylvania, use some form of the ABC test for wage and hour laws, according to the presenters. Others, such as Ohio and Arizona, use a form of the ABC test for unemployment insurance eligibility. There also are states, including Texas and North Carolina, that use some form of the ABC test in certain sectors and also may use it for unemployment insurance eligibility.

“The point here is to understand your state and the state you have drivers in,” Greenland said.

Openforce

Greeland (left) and Stevens

The session was held a little more than a week after California voters approved Proposition 22, which classifies rideshare drivers as independent contractors and establishes labor and wage policies specific to these workers. The measure was approved with 58% of the vote and marks a victory for Uber, Lyft and other app-based transportation and delivery companies. Proposition 22 represents an objection to California’s Assembly Bill 5, which established the ABC test.

Greenland said misclassification claims “almost always come down” to two factors: money and injury. To avoid money-related claims, Greenland advised firms to pay what they claim they will, accurately and on time. To avoid claims related to on-the-job injuries, she said firms should encourage independent contractors to have plans in place in case of injury.

“I think it’s important to make sure you have some type of avenue for your contractors to go, should they get injured,” Stevens said. “Don’t give them easy ways to become disgruntled.”

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