Georgia clarifies independent contractor test for unemployment benefits

Georgia has enacted legislation (House Bill 389) that clarifies the test used to determine whether an individual is an independent contractor or employee for the purpose of unemployment benefits in the state. House Bill 389 takes effect July 1, 2022.

The Details:

Under existing Georgia unemployment law, an individual who performs services for wages will be deemed an employee unless it is shown that:

1. The individual:

• Has been, and will continue to be, free from control or direction over the performance of such services, both under the individual's contract of service and in fact; and
• Is customarily engaged in an independently established trade, occupation, profession, or business; or

2. The individual and the services performed are the subject of an SS-8 determination by the Internal Revenue Service, which decided against employee status.
House Bill 389 amends the law to clarify the factors to consider when determining whether an individual is free from control or direction from the employer. These factors include whether the individual:

• Isn’t prohibited from working for other companies or holding other employment contemporaneously;
• Is free to accept or reject work assignments without consequence;
• Isn’t prescribed minimum hours to work or, in the case of sales, doesn’t have a minimum number of orders to be obtained;
• Has the discretion to set their own work schedule;
• Receives only minimal instructions and no direct oversight or supervision regarding the services to be performed, such as the location where the services are to be performed and any requested deadlines;
• When applicable, has no territorial or geographic restrictions; and
• Isn’t required to perform, behave, or act in a manner that is determined by the Georgia Department of Labor to demonstrate employment.

House Bill 389 also clarifies exemptions from unemployment benefits for music industry professionals and individuals working for network companies. See the text of the law for details.

Next Steps:

• Ensure independent contractor determinations for unemployment purposes use the criteria indicated in House Bill 389.
• When in doubt, err on the side of caution by classifying the individual as an employee. Remember that different tests may be used to determine independent contractor status under other laws.