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New Arizona law creates a rebuttable presumption of independent contractor status
In light of recent employment-related lawsuits against gig economy giants like Uber and Lyft, Arizona has made it a little easier to prove that a worker is an independent contractor rather than an employee. The state recently enacted a law that allows employers to ask workers to sign a declaration stating that they are independent contractors. The declaration includes certain key information about their work relationship with the hiring company."Under the old way, the hiring entity would have the burden of proving by clear and convincing evidence that an independent contractor relationship exists," said Jeffrey Bernick, an attorney with Jackson Lewis in Phoenix.The new law eases the burden on hiring entities, but Bernick cautioned that it's not "a magic pill that cures all."Businesses are struggling with the need for more certainty in this area, said Joseph Clees, an attorney with Ogletree Deakins in Phoenix, in an interview with SHRM Online.This is part of a national trend and an effort by the Arizona legislature to provide more clarity about who is and who is not an independent contractor, at least under state law, he added.
Arizona House Bill 2114, which went into effect on Aug. 6, states that the existence of an independent contractor relationship may be proven by having the worker sign a "declaration of independent business status.""This law seems to be a reaction to what we've seen across the country with the struggles that hiring entities are having with classification issues," Bernick said. "The waters have become somewhat murky lately, and there's been a significant rise in misclassification claims."The new law provides sample language for the declaration, including that the worker understands he or she:
Declarations Are Optional
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