What’s this? California establishing more burdensome regulations that hurt local businesses and send people fleeing the state? Say it isn’t so!
Sadly, it seems to be. But this time it wasn’t the state legislature causing the problem. It was the state supreme court. In April of this year, the court handed down a ruling in a case between a group of employees and their employer dealing with the method the employer used to reclassify them all as independent contractors. While they had a sound case, the court found that there was no rigid definition for what an independent contractor actually was and who would qualify as one. So the justices took it upon themselves to create a new definition. Unfortunately, it was such a stringent set of requirements that many people who voluntarily work as independent contractors would no longer qualify.
These include many independent operators who are barbers or tattoo artists and use the shop of someone else to engage with customers. They generally pay a fee to use “the chair” or a cut of their earnings, but they operate their own business out of someone else’s shop. The court decision mentioned above was challenged, but now the state supreme court has affirmed their decision and the definition to be used. As a result, a number of shops are basically out of business because all of the independent workers have walked out. (CBS Sacramento)
Some small businesses are scrambling to figure out how to stay afloat after a high court ruling.
A recent California Supreme Court decision is changing the way independent contractors are classified, and it’s already having a big impact on local shops. May fear it will hurt millions of workers and affect businesses’ bottom lines. The work doesn’t stop at Downtown Sacramento’s Bottle and Barlow, even if it became a one-man shop.
“I lost my entire staff,” said owner Anthony Gianotti.
He says all seven of his barbers quit after a state supreme court ruling that will change their way of work.
These are the three things the court says must be proven about the person performing the work, and if all three are not applicable, they are considered an employee of the business where the work is performed.
- (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such 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 for the hiring entity.
As you can see, it’s the second item that’s the real killer here. If you own a tattoo or barber shop, you can’t allow other tattoo artists or barbers to set up a chair in your shop and do business there for a cut of their action. If the independent barbers can’t afford a shop of their own, they’re out of luck. But given the frequently sporadic and personal nature of such work, the owner often can’t afford to offer them full time jobs.
Since we’re talking about California, this all rolls back to their desire to make sure everyone is earning “a living wage” and has full benefits, whether the business owner can afford to provide that or not. And now the state is managing to drive small businesses out of existence, or at least out of their state. Well done, Golden State! Pretty soon your Utopia is going to start looking pretty vacant.