Georgia Expanded Definition of Employee, Unemployment Eligibility

Georgia Governor Brian Kemp has signed into law two measures regarding the employment relationship. The first, Law 809 (HB 389), changes the definition of employment for the purposes of unemployment benefits. The second, Law 823 (SB 331), prevents local governments from regulating the schedules or hours of work of employees of a private company.

Law 809: Classification of Employees for Purposes of Unemployment Benefits

Law 809 aims to expand the types of workers eligible for unemployment benefits. However, it also ensures that the nature of an individual’s work will ultimately determine whether an employer-employee relationship exists. Law 809 will come into force on July 1, 2022.

In Georgia, only people considered to be “employees” can be eligible for unemployment benefits. Independent contractors are not entitled to these benefits. Bill 809 changes the definition of employment to include all services rendered by an individual for remuneration. Under this definition, the majority of workers would be considered “employees” unless the Georgia Department of Labor directs otherwise. Based on the expanded definition of employment in Bill 809, more workers may be able to obtain unemployment benefits from a company.

Under the new law, an individual will not be considered an “employee” only if it is shown that they are free from any control or direction over the provision of services for a business and are habitually engaged in a trade, occupation, profession, or business. The following seven factors should be considered in making this decision:

  • Ability to work for other companies or hold another job at the same time;
  • Freedom to accept or refuse work assignments without consequence;
  • Absence of a minimum number of hours to work or orders to obtain;
  • Ability to establish own work schedule;
  • Absence of supervision or instructions regarding the services to be performed;
  • Absence of territorial or geographical restrictions; and
  • No Obligation to Perform, Behave, or Act in a Certain Way Related to the Performance of the Services.

The law also provides specific standards that apply in the context of music industry professionals, ridesharing network services, and certain delivery services.

For Georgian businesses today, classifying a worker as an “employee” or “independent contractor” is more critical than ever. Law 809 creates an enforcement mechanism by implementing a civil penalty, paid to the Georgia Department of Labor, if a company incorrectly classifies its workers. Under the new law, the Commissioner sets the amount of the civil penalty by assessing the number of misclassified individuals and the frequency of misclassifications.

Thus, Georgian companies should be aware of the classifications assigned to each of its workers.

Law 823: Preventing Local Governments from Enacting Certain Laws

Law 823 prevents local governments from enacting laws regulating the hours of work, schedules, or production of employees of private companies. The measure entered into force on May 5, 2022.

Law 823 is Georgia’s latest attempt to attract business to the state by preventing local governments from passing restrictive wage and hour laws. Georgian law already prohibits cities and local governments from passing laws applicable to private employers. These laws govern issues such as minimum wage, overtime, benefits, and compensation for schedule changes.

Law 823 amends existing law to prohibit local governments from enacting laws applicable to private employers that would govern the hours of work, schedules and performance of employees.

Meanwhile, in many other states, local governments have enacted local ordinances dealing with these topics. Obviously, Governor Kemp and the state legislature want to differentiate the state from the laws of those other states and local governments.

© 2022 Jackson LewisNational Law Review, Volume XII, Number 134

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