Effective July 1, 2022, Georgia amended its prior test (“AC Test”) for determining whether a worker is an independent contractor or an employee under its Employment Security Law and replaced it with a new test which now examines the nature and scope of the individual’s work, rather than purely the relying on the control exercised to determine the existence of an employer-employee relationship. Under the new law, seven factors are considered in making this determination:
- Ability to work for other companies or hold other employment at the same time;
- Freedom to accept or reject work assignments without consequence;
- No minimum hours to work, or in the case of sales, no minimum number of orders to be obtained;
- Discretion to set his or her own work schedule;
- Receipt of only minimal instructions and no direct oversight or supervision regarding services to be performed, such as the location where the services are to be performed and any requested deadlines;
- No territorial or geographic restrictions; and
- No requirement to perform, behave or act or, alternatively, being compelled to perform, behave or act in a manner related to the performance of services for wages.
As such, a worker is presumed to be an employee unless the worker is:
- Customarily engaged in an independently established trade, occupation, profession or business; and
- Has been and will continue to be free from control or direction over the performance of services for wages, both under the worker’s contract of service and in fact, as demonstrated by certain factors.
The amended law also establishes exemptions for music industry professionals and transportation network company workers and provides for certain civil penalties.
A worker also can be considered an independent contractor under federal law if the IRS issues an SS-8 ruling to that effect.
Next Steps for Employers
Multistate employers should keep in mind that other states may have specific tests to establish independent contractor status which may have more stringent requirements than those under federal or Georgia law.
Employers are encouraged to consult with their legal counsel and/or tax professional for additional guidance on federal and state laws regarding worker classification. Additionally, HR Works’ Virtual Helpline and HR Strategic Services clients receive complimentary Independent Contractor Assessments as part of their services. Contact us your HR Strategic Partner or our helpline team to learn more.