Late last month a California Court ruled that a 2020 ballot measure that exempted ride-share and food delivery drivers from a state labor law is unconstitutional. 

This ruling is grounded on strong precedent. As noted by the judge this is because the ballot measure unreasonably "limits the power of a future legislature to define app-based drivers as workers subject to workers' compensation law". This not only makes the entire measure unenforceable, but it is also likely to be upheld upon appeal.

This is important because it's essential for your organization to correctly determine whether the individuals providing services are W-2 reportable employees or 1099 reportable independent contractors. Note that an employee is generally considered to be anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker’s services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public. Doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers or auctioneers are generally independent contractors.

Whether a worker is an independent contractor or an employee depends on the relationship between the worker and the business. Generally, there are three categories to examine:

• Behavioral Control − does the company control or have the right to control what the worker does and how the worker does the job?
• Financial Control − does the business direct or control the financial and business aspects of the worker's job. Are the business aspects of the worker’s job controlled by the payer? (Things like how the worker is paid, are expenses reimbursed, who provides tools/supplies, etc.)
• Relationship of the Parties − are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

If your organization misclassified an employee without a reasonable basis, you could be held liable for employment taxes for that worker. Generally, an employer must withhold and pay income taxes, Social Security and Medicare taxes, as well as unemployment taxes.