New California law makes it harder to treat employees as freelancers

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LOS ANGELES (CNS) – A new California law that makes it harder for companies to treat workers as independent contractors goes into effect Jan. 1, making small businesses in and outside the state consider how they staff their operations.

The law puts tough restrictions on who can be considered independent contractors or freelancers rather than employees. Supporters say it addresses inequities created by the growth of the gig economy, including the employment practices of ride-sharing companies like Uber and Lyft, which use contractors, NBC4 reported.

Company owners with independent contractors must now decide whether to hire them as employees or look for help in other states. Another alternative: asking these workers to start their own businesses, a setup the law allows.

Although the law affects companies of all sizes and out-of-state businesses that use California contractors, it likely will have a greater impact on the many small businesses that have hired independent contractors because of limited staffing budgets.

Meanwhile, several legal challenges are pending from groups of workers effected by the change as well as firms such as Uber and Postmates.

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