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State legislators passed a bill that offered guidance on how to determine if a worker is an independent contractor and defined fees for misclassifications.

Classifying Independent Contractors

Louisiana’s House Bill 705 (HB705) established a method employers can use determine if a worker should be classified as an independent contractor. HB705 states there shall be a rebuttable presumption of an independent contractor relationship with the contracting party for whom the independent contractor performs work, if an individual or entity controls the performance, methods, or processes used to perform services and meets at least six of the following criteria:

• The individual or entity operates an independent business that provides services for or in connection with the contracting party.
• The individual or entity represents the provided services as self-employment available to others, including through the use of a platform application to obtain work opportunities or as a lead generation service.
• The individual or entity accepts responsibility for all tax liability associated with payments received from or through the contracting party.
• The individual or entity is responsible for obtaining and maintaining any required registration, licenses, or other authorization necessary for the legal performance of the services rendered by him as the contractor.
• The individual or entity is not insured under the contracting party’s health insurance or workers’ compensation insurance coverage and is not covered for unemployment insurance benefits.
• The individual or entity has the right to accept or decline requests for services by or through the contracting party and is able to perform services for or through other parties or can accept work from and perform work for other businesses and individuals besides the contracting party even if the individual voluntarily chooses not to exercise this right or is temporarily restricted from doing so.
• The contracting party has the right to impose quality standards or a deadline for completion of services performed, or both, but the individual or entity determines the days worked and the time periods of work.
• The individual or entity furnishes the major tools or items of equipment needed to perform the work.
• The individual or entity is paid a fixed or contract rate for the work performed and the contracting party does not pay the individual or entity a salary or wages based on an hourly rate.
• The individual or entity is responsible for the majority of expenses incurred in performing the services, unless the expenses are reimbursed under an express provision of a written contract between the parties or the expenses reimbursed are commonly reimbursed under industry practice.
• The individual or entity can use assistants as deemed proper for the performance of the work and is directly responsible for supervision and compensation.

Learn more about the bill.

Penalties For Misclassification

Employers can be penalized for misclassifying workers:

• For a first offense, organizations can be fined $500 per misclassification. However, if they make changes to become compliant and properly classify workers, that fee can be waived.
• If a second offense occurs, the fee goes up to $1,000.
• If additional violations are assessed, that amount increases to $2,500.

Running Background Checks

Whether your organization is bringing on employees, contractors or volunteers, running comprehensive background checks is an essential part of the process. These reports provide valuable information that helps employers build strong teams and maintain safe workplaces.

When you need employment screening services, please contact us. Our knowledgeable team can help you customize background check packages for any position. We are available to assist you Monday through Friday from 5am to 6pm PT.