This commentary is in reference to content found on the California Environmental Protection Agency’s website. Please visit their site for more information.
Unfortunately, we commonly see misclassified independent contractors who fail to make an investment in their business, such as buying equipment or investing in software. Further, many companies want to engage independent contractors on a personal services contract. While prohibiting an IC from hiring workers to perform the services set forth in a contract does not automatically mean the IC is misclassified and is in fact a common practice, it is also true that the chances of misclassification drop rather significantly if the independent contractor is permitted to hire workers.
Such is the case with the California Environmental Protection Agency, which explicitly requires all independent contractors who want to be on the agency’s “approval list” to have the “proper equipment” (i.e., the IC must invest in its own business) and “qualified personnel to conduct the tests” (i.e., no prohibition against the IC from hiring workers to perform services under the contract).