New Ruling on independent contractors in Ca

I can't see how they will survive. Isn't one of the new rules, the IC can't engage in the primary activity of the business?
 
From CAHU

Dynamex created a new worker classification standard referred to as the “ABC Test,” to determine whether a worker is an independent contractor or an employee. Under this new rigid “ABC test,” EVERY person will be considered an independent contractor only if the hiring entity can PROVE ALL THREE of the following:
(A) That the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
(B) That the worker performs work that is outside the usual course of the hiring entity’s business; and,
(C) That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
 
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B is the killer. Selling insurance is the usual course of an insurance agency's business.
 
The Dynamax decision of the CA Supreme court did not create the ABC test. The ABC test already existed. Nor is the ABC test as rigid as it looks.

As a matter of fact, the Dynamax decision wasn't even about ruling on the employee vs independent contractor argument.

All the Dynamax decision did was uphold the certification of delivery drivers as a class with regard to California wage orders.

The court opened it's decision by writing:

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Along the way the court reviewed the historical development of case law regarding employee vs independent contractors and exhibited a preference for the ABC test while writing:

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Yes, I read the entire 82 pages of the decision and I am inclined to think that insurance agents need not panic over the decision.

Dynamex Operations West, Inc. v. Superior Court of Los Angeles County

I think that case law will continue to evolve as more and more misclassified employees bring suit.

I think an exception to B may eventually be carved out by the courts for insurance agents (if it's even necessary under today's standards) who are self employed and write for a variety of insurance companies, agents, or brokers.
 
GovAlert: NAIFA-California Needs Your Help! - NAIFA-California

GOVALERT: NAIFA-CALIFORNIA NEEDS YOUR HELP!
Friday, September 7, 2018 (0 Comments)
Posted by: Admin
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NAIFA-California needs your help in fighting a recent California Supreme Court ruling that could change many 1099 contractor relationships into W-2 employees. This could impact you as an agent/advisor; affect independent contractors you hire, and even agents whom you partner on business. Imagine a world where you are now a W-2 employee for every single insurance carrier you’re contracted with? How could this negatively affect your commissions, ability to serve clients, ability to work independently and impact your tax reporting and deductions?

You may have heard about the recent ruling by the California Supreme Court in Dynamex Operations West v. Superior Court (“Dynamex”) that created a new worker classification standard. The new standard referred to as the “ABC Test,” is far more rigid than the previously used scheme to determine whether a worker is an independent contractor or employee. Under this new “ABC test,” a person will be considered an independent contractor only if the hiring entity can prove all three of the following:

(A) That the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
(B) That the worker performs work that is outside the usual course of the hiring entity’s business; and,
(C) That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

NAIFA-California recognizes that this ruling could have negative implications across all sectors of the economy, including insurance agents and advisors. The concern is that the Dynamex decision would hurt agents and advisors seeking flexible, independent or part-time work. As such, we are working with others in the broader business community, as well as our partners in the insurance industry, to raise the issue and identify the negative consequences this new test could have on independent contractors. Several stakeholder groups are urging the Legislature and Governor’s Administration to engage on this issue and suspend the application of the Dynamex decision until all parties impacted by this decision can work together to develop a balanced test for determining independent contractor versus employee status that reflects the needs of California’s economy and the workforce. NAIFA-California is tracking this conversation closely to ensure that those working in the insurance and financial services industry are protected.

We need your action on this important decision immediately. Please do the following to help stop this overreach from directly affecting your independence and ability to serve your clients:

Visit https://imindependent.co to sign-up and have your voice heard!

Give to IFAPAC (Insurance and Financial Advisor Political Action Committee)!

Encourage a friend to join NAIFA!

Visit https://imindependent.co to sign-up and have your voice heard!
 
I think an exception to B may eventually be carved out by the courts for insurance agents (if it's even necessary under today's standards) who are self employed and write for a variety of insurance companies, agents, or brokers.

For the truly independent agent, I think it will be business as usual. For the agencies that hold an agent captive, I think their days of 1099 are limited. There is a special rule for life agents who work for one company, but that is the exception. The P&C agencies that only allow an agent to write for them but want to do it on a 1099 basis are probably going to have to reconsider how they do business.
 
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