Landmark changes in laws for freelancers in Illinois and gig workers in California have the best interests of Independent Contractors in mind. Let’s dive into each and the implications.
Freelancers in Illinois are witnessing a significant shift in their working conditions with the implementation of the Freelance Worker Protection Act. This law aims to ensure fair treatment for freelancers by mandating clear contracts, timely payments, and legal protections against exploitation. The law only applies to contracts taking effect after July 1, 2024; it is not retroactive.
According to the Illinois Department of Labor, here are the key provisions:
It’s important to note who is and who is not considered a freelancer since there are conflicting regulations. Refer to “Independent Contractors: Conflicting Definitions, Conflicting Regulations” for more in-depth details.
In a landmark decision, the California Supreme Court has ruled that gig workers can continue to be classified as independent contractors, upholding the constitutionality of Proposition 22. This decision contrasts with the state legislature’s AB 5, which aimed to reclassify gig workers as employees to extend standard labor protections to them.
Proposition 22: Passed in 2020, this ballot initiative classifies gig workers for companies like Uber and Postmates as independent contractors. It offers protections such as wage guarantees at 120% of minimum wage, a 35 cents-per-mile reimbursement, healthcare subsidies, and accident insurance.
AB 5: This law, passed in 2019, introduced the “ABC” test to classify workers as employees unless they met specific criteria. It aimed to provide gig workers with minimum wage protections, unemployment insurance, and other benefits.
The court’s ruling allows voters to use ballot initiatives to amend existing laws, thereby permitting gig workers to maintain their independent contractor status. This decision has sparked varied reactions, with labor unions decrying it as a setback for workers’ rights, while industry groups praise it for preserving the flexibility and independence that many gig workers value.
The ruling has significant implications beyond California, particularly as similar debates unfold in other states and at the Federal level. The Biden administration’s adoption of a test similar to the ABC test nationally faces legal challenges, and this ruling could influence the outcome of these challenges.
With the myriads of conflicting regulations, it’s imperative that businesses properly classify their workers. When you engage us, we also review contracts, compensation, duties, and assess the level of exposure and risk of misclassification. Our evaluation factors in all jurisdictions and is done under the advice of employment attorneys specializing in misclassification. If workers fail to classify and remediation efforts aren’t possible, nextSource then recommends engaging workers under Employer of Record (EOR) services in which a third party services as the legal employer for a temporary worker on behalf of the organization.