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Georgia Changes Its Definition of Employment for Purposes of Unemployment Benefits

Effective July 1, 2022, Georgia appears poised to expand its definition of employment, as it relates to employer paid unemployment benefits, pursuant to Act 809, formerly House Bill 389. Georgia’s definition of employment simply states that “services performed by an individual for wages shall be deemed to be employment.” Using this definition, most workers will likely default to employees unless and until the Department of Labor determines (1) that the individual had and continues to have control or direction on how he performs his services, in fact and under a contract of service, and typically works in an established trade, occupation, profession, or business, or (2) obtains a determination from the Internal Revenue Service that the individual is an independent contractor.

Act 809 appends a seven-factor test to the definition of employment that asks whether the worker is:

  1. Not prohibited from working for others while performing services.
  2. Able to freely accept or reject other work assignments, without consequences.
  3. Not required to work a minimum number of hours or meet a minimum sales quota.
  4. Responsible for setting her work schedule.
  5. Given minimal instruction and has no direct oversight or supervision on how, when, or where, to perform her services.
  6. Not limited to a certain location when performing her services.
  7. The decisionmaker on how she performs, acts, or behaves when completing the services.

Act 809 also includes separate factor tests used by the Department of Labor for determining the classification status of music industry professionals and rideshare drivers.

Employers with misclassified workers are subject to the DOL’s assessment of fines, penalties, or offenses. For individuals or businesses with less than one hundred employees, the DOL may assess a penalty of up to $2,500 for each misclassified worker. Businesses with one hundred or more employees are subject to a penalty of up to $7,500 for each misclassified worker. These penalties do not include the additional cost of the investigation or interest for delinquent payments that the DOL may assess.

Taylor English’s Employment Law group is available to advise employers who have questions or concerns regarding this change in Georgia law.


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