California classifications for contractors and our reaccreditation are both included in this compliance update.
Each quarter, PlusOne Solutions provides a compliance update to keep you abreast of changes and updates in legal developments as well as company news. This information is provided for education only and does not constitute legal advice.
In early May, the California Supreme Court severely tightened the definition for independent contractor classifications. The standard was a result of Dynamex Operations West, Inc. v. Superior Court and creates a reclassification regime that will extend across the state. Any business with independent contractors needs to be aware of this change.
To determine if an individual is an independent contractor, the hiring entity must be able to demonstrate all three of these requirements are met:
What does this mean?
Of the requirements, (1) is not that different from the current standard and remains focused on the nature and degree of control the individual has over their work, nor is (3), which aims to confirm the individual has independently made a decision to go into business for themselves, from the current requirements. Requirement (2), however, is where the most notable change occurs and sets a very clear requirement around how independent contractors, and the functions they perform, fit into the greater business model. The purpose of this requirement is to determine if the services being provided are comparable to that of an employee.
What Comes Next?
As California courts begin to apply this new standard, we will monitor exceptions for federal law or other factors. Likewise, businesses throughout California should review their contractor relationships and we will keep an eye on other states who may follow this lead.
PlusOne Solutions achieved reaccreditation with the National Association of Professional Background Screeners (NAPBS) Background Screening Agency Accreditation Program (BSAAP), an honor held by less than 2% of over 5,000 US Consumer Reporting Agencies (CRAs).
The audit tested almost 60 requirements and cited complete conformance with the Standard with no opportunities for improvement or non-conformities. The BSAAP standards audit a Consumer Reporting Agency for its commitment to excellence, accountability, high professional standards, and continued institutional improvement. The program is similar to SSAE16, (formerly SAS70), and ISO certifications but is specifically geared towards measuring excellence in the background screening industry.
Accredited firms must demonstrate compliance with standards in the areas of Data Information and Security, Legal and Compliance, Client Education, Data Standards, and other Business Practices. The standards enforce strong data management and security that results in the highest levels of consumer protection. All processes must be formally documented and employees must be trained to the standards therein.
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