In a landmark case on independent contractors in California, the California Supreme Court on Monday passed a judgment in which it made it more difficult for the studios to classify their teachers as independent contractors rather than as employees. If you have this question Are yoga teacher’s independent contractors in California? then let’s have a look at this latest case Dynamex Operations West, Inc., v. The Superior Court of Los Angeles, California in this the Supreme Court observed that classification of a worker has important consequences. Let’s look at what the Court further opined in this matter.
Our yoga teacher’s independent contractors in California? For this, the Supreme Court further said that the business has the responsibility of paying Social Security and payroll taxes, unemployment insurance taxes, employment taxes, and worker’s compensation insurance if the worker is an employee. Plus, the business should also meet the requirements concerning minimum wages, hours, working conditions, and various employment protections. However, if the worker is an independent contractor, then the business doesn’t have to bear any of these obligations. From a policy point of view, those businesses that have independent contractors have an economic benefit, over those businesses that have employees.
Yoga Studios in California
And the reason for the same is that they do not have to pay taxes or follow the employment laws. Here the workers do not have the legal protection which the employees have. Plus, the independent contractors deprive the government of billions of dollars of tax revenues. Now, you will have a question in your mind as to what does it means for yoga studios in California? It means that the yoga teachers who teach in your studios are presumed to be employees. Yoga studios will have to meet the restrictive ABC test.
The ABC Test
As per the ABC, test teachers are independent contractors only if – (a) you do not control or direct how they teach their classes, (b) if teaching yoga is outside of your yoga business, and (c) the teacher has an independent business that is the same as they work they do for you. Now, this has become a very difficult burden for the yoga studios to carry. Assuming that you do not control your teachers and that they are running a bonafide yoga teaching business, it would become difficult to show that your teacher’s business is separate from your yoga studio business.
What are the Possibilities ?
If you are in the continuous procedure of setting up a new yoga studio then in such a scenario I suggest you treat your teachers as employees. In following this manner you will not have to worry about anything related to the audit. You will be already complying with the laws of taxation. If you are presently categorizing your teachers as independent contractors, then you should re-categorize your teachers as employees. This will not dowse any kind of responsibility that you may have incurred due to improperly re-categorizing your teachers in the past.
Final Words
Plus, through this at least you will show your good faith attempt to follow the law and you will not have any kind of tax liability in the future. So, all that you have to do is simply re-categorize your teachers as employees. Hopefully, through this guide, your queries are solved.
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