Episode 53: Classifying Employees vs. Independent Contractors: Navigating Compliance in the Event Industry

Learn more about the recent ruling by the Department of Labor on employee classification as Angela and Jennifer Watson explore the implications for the event staffing industry.


About the Episode

Join Angela and Jennifer Watson, VP of HR at LASSO, for this episode of "Corralling the Chaos" as they discuss the recent ruling by the Department of Labor on employee classification. Delving into the implications for the event staffing industry, they provide an educational overview of the law change and its potential impact. From the shift to the economics realities test to effective communication with teams, they offer insights on ensuring compliance. They also touch on upcoming rulings related to minimum wage and salary expectations. Tune in for a concise and informative exploration of compliance in the event industry.

Meet Your Speakers

- Angela Alea: President & CRO of LASSO, Host of Corralling the Chaos

- Jennifer Watson: VP of HR at LASSO

Overview

The discussion begins with an introduction to the topic of compliance, followed by an in-depth exploration of the recent law change. The conversation then moves on to how this law change could impact the event industry, what steps companies should take to ensure compliance, and potential challenges and consequences. The session wraps up with a Q&A segment.

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Takeaways

Takeaway 1: The new federal law, Economic Realities Test, redefines the classification of independent contractors and employees.

The Economic Realities Test, recently passed and now effective, changes the previous criteria used to define an independent contractor versus an employee, expanding it from two categories to six. Angela and Jennifer both emphasize that the test is not a simple yes or no checklist; it's a totality test, evaluating the overall picture of a worker's situation.

“First of all, I am not going to speak lawyer speak. I'm just going to give you the kind of general population here speak. So high level, what happened? There was an economics reality test which basically decided, "are you an employee, are you an independent contractor?" explained Jennifer.

Jennifer went on to elaborate on the complexity of the new law, "It now has gone from two things that you test to six parts of the test. That's kind of the biggest thing, and it's a totality test. So whereas before it was one or two, yes or no, now it's really six things. And it's saying, hey, you might be half independent contractor, half employee, whatever the case is, but you have to have more of one than the other."

Takeaway 2: Companies can't ignore these changes; taking proactive steps is necessary to ensure compliance.

Angela and Jennifer stressed the importance of understanding the implications of the new law and taking proactive steps to ensure compliance. They suggested consulting with accountants, lawyers, and leadership teams to make informed decisions.

"Talk to your accountant. I mean, honestly, your accountant is probably the one that's going to have the best idea about it and be able to guide you on that," advised Jennifer.

She further emphasized, "No one's going to come knocking at your door just yet tomorrow, but they will come knocking at some point over the next couple of years. I truly believe that."

Takeaway 3: Communication is key: Being able to explain shifts in worker status is crucial.

With the implementation of the new law, many companies may have to change how they classify their workers. The two highlighted the importance of understanding the implications of these changes and communicating them effectively to their teams.

"Even if you do make a change, you've got to be able to explain it to the people you've been working with for so long. You owe it to your teams to be able to say, here's why," stated Jennifer.

Angela added, "And if you're having to move somebody from a 1099 to a W-2, what are the advantages for that individual? So really just kind of understanding what some of those are, and a lot of them are around the cost implications."

Insights surfaced

- The new law, known as the economics realities test, changes the way individuals are classified as employees or independent contractors. It has expanded from a two-factor test to a six-factor test.

- This law change is already in effect as of March 11 this year.

- The law change is expected to have a significant impact on the event industry. It's crucial for companies to understand the implications and take steps to ensure compliance.

- It's important for companies to communicate effectively with their teams about any changes in their classification and how it might affect them.

- Companies should seek advice from accountants and legal experts to understand the law change and ensure compliance.

- There are also potential upcoming rulings related to minimum wage and salary expectations for highly compensated employees.

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