It’s been a crazy couple of years for small businesses, sole proprietors, freelancers, and independent contractors. Trying to navigate the intricacies of COVID restrictions, dealing with hiring problems and supply chain issues, trouble with social unrest, and many other “new” problems can seem overwhelming to small businesses, including gig workers, freelancers, contractors, and sole proprietors.
Well, there’s potentially good news ahead: several states are enacting new laws for 2022 that (in some cases) make things a little easier for you. We’ve gathered some of them below for your consideration.
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Important: This article is for informational purposes only, and should not be considered legal advice. Womply assumes no liability for the use or misuse of this information. This is not a comprehensive list of all laws and regulations for all states. Get counsel from a licensed business attorney or advisor in your state.
New Federal laws for 2022 that can impact small businesses, sole proprietors, freelancers, gig workers, and independent contractors
There are several new Federal regulations taking effect for 2022 that can impact small businesses, contractors, freelancers, and others.
The first will be important for those whose compensation includes tips, such as drivers, entertainers, restaurant waitstaff, and many other workers, as well as businesses that employ such workers.
The new Final Rule from the Department of Labor is amending their regulations regarding how employers may take a tip credit.
Specifically, the Department of Labor “is amending its regulations to clarify that an employer may only take a tip credit when its tipped employees perform work that is part of the employee’s tipped occupation. Work that is part of the tipped occupation includes work that produces tips as well as work that directly supports tip-producing work, provided the directly supporting work is not performed for a substantial amount of time.”
Another final rule concerns tip pooling and penalties for employers who unlawfully retain employees’ tips.
There are also the more well-known requirements for employers and health-care workers relating to the COVID-19 vaccine, some of which are still up in the air and subject to court action. Read a summary of the new Federal regulations for 2022 and of course be sure to check your local sources for updates and specific state requirements.
New state-level regulations and requirements for 2022
Several states are implementing new regulations that will go into effect for 2022. It’s sometimes said that California is a test-bed for widespread regulatory trends (sometimes worded “as California goes, so goes the nation”), so let’s first look at what California is doing in this regard for 2022.
California is enacting bills relating to PTO, wage theft, criminal background checks for employees, production quotas for warehouse distribution center employees, health insurance, non-disclosure agreements, employer liability, and more.
Read more about California’s new laws and regulations taking effect for 2022.
Certain workers and contractors in California now have until the end of 2024 to conform to the ABC test
Under the new California Assembly Bill 1561, certain groups receive an extension of their exemption from the ABC test until December 31, 2024. These include:
- licensed manicurists
- construction trucking work performed by a CSLB licensed subcontractor performing work pursuant to a subcontract
- data aggregators and research subjects
- claims adjusters
- third-party administrators
- manufactured housing salespeople
What is the ABC test for California workers?
Under California’s ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Learn more about the ABC test.
Illinois is enacting several new laws for 2022 that may impact workers and small businesses
Like California, Illinois is historically proactive about enacting new laws and regulations, and for 2022 small businesses, contractors, freelancers, and sole proprietors will want to be aware of new Illinois legislation relating to employers asking for salary history, disability discrimination, health insurance, recognizing human trafficking, domestic violence, and non-compete agreements.
In addition, the Illinois Secure Choice Savings Program Act now applies to businesses with just 5 employees, rather than 25 or more.
New York enacts new regulations for 2022 that impact businesses and workers
New York state has also been busy working on new 2022 legislation relating to whistleblower protection, privacy/surveillance of employees, paid family leave, discrimination regarding domestic workers, and a labor peace agreement requirement for city human services contractors, including foster care, day care, home care, legal services, and health or medical services, among others.
Of particular note to general contractors, subcontractors, and construction workers is New York bill 3350-A that, Litter points out, “Makes general contractors jointly and severally liable for wages, benefits, or wage supplements owed by subcontractors to construction workers. Contractors and subcontractors must be able to provide payroll records for all employees providing labor on a project. Failure to timely provide records shall be grounds for a contractor to withhold payments owed to a subcontractor at any level.”
Lots of other states have new 2022 regulations in the books. To check to see if your state has enacted new regulations that may impact you and your business, ask your local chamber of commerce or check out Littler’s full state-by-state rundown.
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