Dumbest New Employment Laws? Democratic and Republican Clunkers

As the year winds down, I’m receiving year-end updates from various legal subscriptions—and I’m combing them for my Dumbest Employment Law of the Year.

Here are two candidates.

Democratic Clunker: California’s new “ABC” independent contractor law. The law corrects for employer abuses known as “misclassification.” This occurs when a company converts or defines an actual employment-based job and warps it into an independent contractor relationship. Example: Major telecoms have laid-off cable installers but engage them (ahem … avoid use of “rehire” because that means they’re employees) as independent contractors. Advantages: This avoids employment taxes, worker’s compensation premiums and claims, and a bevy of possible employment lawsuits (e.g., race discrimination). Downside: Plaintiff lawyers are beating the pants off companies who do this. Companies are being hit with large judgments for overtime, damages, attorney’s fees and so on.

Now come Democrats in California, after the Republican Party was decimated in November. They want to codify a recent state Supreme Court ruling that cracks down on independent contracting by employers.

The bill is overkill. Yes, it rectifies problems … but it defines independent contracting so narrowly that firms such as Google and Facebook—who rely heavily on contract workers— will feel tempted to move large blocs of work outside the state and maybe the country—or maybe to AI (artificial intelligence). If passed, the law might immediately result in large new employment taxes for companies. It’s too much, too soon. 
For more on the ABC test, see  
https://www.sacbee.com/news/politics-government/capitol-alert/article222466405.html

A better idea (if I may) would be to insert an income threshold for contractor status—say, $5,000 per month—  to protect low-wage earners such as nurses, cable installers, couriers, and to treat higher wage earners as actual contract workers. In other words, use the ABC test, but only when individuals are under the earnings limit. Thus, cable installers, nurse’s aides, couriers, Uber drivers and similar would be reclassified as employees—but skilled computer programmers, consultants, on-call physicians, and similar would still be independent contractors because their higher earnings imply mobility to find new work and also specialization associated with contract workers.

Republican Clunker: Michigan’s new law that limits how much accrued sick leave an employer owes to departing employees. The details are not clear because this is part of the Republican power-grab (with bills drafted behind closed doors and passed without hearings for the public). The gist would be that companies could pocket an employee’s accrued sick leave.

First—how greedy. Employers define this benefit. If they decide to award it, they should pay it out.

But never mind that. Employees will figure this out on their own. Instead of giving two weeks’ notice and working that time to transition the job to a new person or to give the firm time to make a new hire, employees will call in sick, work the new job, and liquidate their accrued sick leave. This is a dumb, mean-spirited law that incentivizes irresponsible employee behavior.