‘IC-Neutral’ and ‘IC-Minus’ Legislation, Rule-Making and Court Decisions

“IC-Neutral” legislation, rule-making and court decisions refers to new and proposed laws and regulations and new judicial rulings that do not penalize legitimate independent contractor (IC) relationships or alter the test for IC status, but are intended to focus on the misclassification of employees as ICs and, in particular, intentional IC misclassification.  Such laws would include those that deter or discourage IC misclassification by, among other things, increasing penalties or other sanctions for improper classification of employees as ICs.

“IC-Minus” legislation, rule-making and court decisions refers to new and proposed laws and regulations and new judicial rulings that are intended to or will result in curtailing legitimate IC relationships by, among other things, altering existing tests for IC status so that those who would otherwise qualify as ICs under the common law or other existing legal tests for IC status will now become “employees” and the maintenance of previously lawful IC relationships will become unlawful.

“IC-Neutral” and “IC-Minus” legislation and rule-making is often a result of political and economic interests being articulated through legislative or administrative change.

Certain of the state laws enacted since July 2007 (as catalogued in the preceding page under Resources / Links) are IC-Neutral while others are IC-Minus.

The following are selected articles, blog posts, and publications that address the issue of IC-Neutral or IC-Minus laws, rule-making and judicial decisions:

  • Independent Contractor Bombshell for California Businesses: California Supreme Court Curtails the Lawful Use of ICs,” details how the California Supreme Court in Dynamex Operations West v. Superior Court (No. S222732), created a new test that is modeled after the so-called ”ABC” test used in Massachusetts, widely viewed as the toughest test in the country for ICs.  This “IC-minus” court decision was  particularly surprising in light of recent legislative efforts across the country to regulate, instead of curtail, the increasing use of freelancers and on-demand workers including those in the gig economy. Questions left open by that decision, which applies to so-called “non-wage order” claims in California, was the subject of a later blog post.
  • New York’s Highest Court Issues IC-Friendly Ruling,” analyzes an October 25, 2016 decision by the New York Court of Appeals affirming that New York’s highest court supports the use of properly classified independent contractors and recognizes that some facts that are just as readily required of an IC as of an employee cannot be used by administrative agencies and lower courts in New York to defeat a worker’s classification as an independent contractor. This decision is “IC-Neutral” as it simply applies existing law to a factual scenario.

Analysis by Richard Reibstein

Edited by Janet Barsky