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Georgia Employers: New Laws Will Classify More Independent Contractors As Employees, Restrict Local Laws On Work Schedules – Employee Benefits & Compensation

On May 2, 2022, Georgia Governor Brian Kemp signed into law HB
389 (Act 809), altering the scope of the employer-employee
relationship. This new law is likely to reclassify many independent
contractors as employees and trigger a host of liabilities and
obligations for Georgia employers. This measure will become
effective on July 1, 2022.

Ultimately, lawfully classifying workers and taking account of
the liabilities and obligations that attach to those
classifications has never been more important. If you work with
independent contractors, seek legal counsel.

Additionally, on May 5, 2022, Georgia enacted a new,
employer-friendly law, SB 331 (Act 823), that restricts cities and
counties from enforcing local rules governing work hours,
scheduling and work output. This restriction became immediately
effective and is reminiscent of the state’s 2020 attempts to
stop local governments from enforcing local COVID-19 restrictions
that conflicted with the state’s more relaxed COVID-19
standards. The resulting turf war between the state and local
governments left many employers wondering which rules—state
or local—they were required to follow. The same may happen
with Georgia’s new attempt to preempt local rules on workplace

Act 809 Expands the Definition of an “Employee” for
Unemployment Benefits

Act 809 amends the provisions of the Georgia Code relating to
unemployment benefits. Specifically, it changes the definition of
“employment” to include “services performed by an
individual for wages.”

Under Georgia common law (i.e., law made by the
judiciary, rather than the legislature), the distinction between
employees and contractors boils down to one key element: control.
Generally, an employer-employee relationship exists by contract (an
employment agreement) or, more frequently, on an at-will basis,
when the employer assumes the right to control the time and manner
of executing the work.

However, the passage of Act 809 expands the category of workers
who may be able to claim unemployment benefits. Now, the nature and
scope of the individual’s work—rather than purely
control—ultimately determines the existence of the
employer-employee relationship. Under the new law, seven factors
are considered in making this determination:

  1. Ability to work for other companies or hold other employment at
    the same time;

  2. Freedom to accept or reject work assignments without

  3. No minimum hours to work, or in the case of sales, no minimum
    number of orders to be obtained;

  4. Discretion to set his or her own work schedule;

  5. Receipt of only minimal instructions and no direct oversight or
    supervision regarding services to be performed, such as the
    location where the services are to be performed and any requested

  6. No territorial or geographic restrictions; and

  7. No requirement to perform, behave or act or, alternatively,
    being compelled to perform, behave or act in a manner related to
    the performance of services for wages.

In light of this expanded definition of “employment,”
more workers will be classified as employees for the purposes of
unemployment benefits. Act 809 classifies workers as contractors
only if they are autonomous and unrestricted in the performance of

Act 809 also sets forth specific criteria to be considered in
determining the employment status of music industry professionals
and individuals who perform services for network companies such as
ride-hailing app services, among other transportation and delivery

What Act 809 Means for Employers: New Obligations, Risks
and Liabilities

Georgia employers must understand, critically evaluate and
document the classification of workers as employees or independent
contractors, or face costly consequences for unlawful
classification. Act 809 provides a sliding scale of civil
penalties, depending on the employer’s size, if an employee is
classified incorrectly. For example, employers with more than 100
employees face a penalty of up to $7,500 per worker.

More importantly, Georgia’s disability discrimination law
(the Georgia Equal Employment for Persons with Disabilities Code)
and many other Georgia-specific employment laws do not define what
constitutes an “employee” entitled to damages under the
law. Therefore, courts are likely to look to the expanded
definition of “employee” under Act 809 to determine
liability under the Georgia Equal Employment for Persons with
Disabilities Code and other employment laws. This means that the
expanded definition of “employee” is likely to affect not
only Georgia’s unemployment law, but also Georgia’s laws
governing discrimination, wage-and-hour requirements and
recordkeeping. Misclassification may also implicate tax laws
relative the employer’s failure to withhold and remit wages and
Social Security, federal unemployment and Medicare contributions to
the government. In other words, Act 809 is likely to trigger a host
of liabilities and obligations for Georgia employers beyond just
unemployment benefits. Employers uncertain about meeting the new
law’s requirements and how it classifies workers as employees
or contractors should consult with experienced legal counsel.

Act 823 Attempts to Preempt Workplace Laws Related to Private

Act 823, the “Protecting Georgia Businesses and Workers
Act,” amends Georgia’s minimum wage law by prohibiting
local governments from enacting or enforcing local regulations
governing work hours, scheduling and work output. This
employer-friendly law is designed to constrain local governments
from dictating certain workplace parameters applicable to private

What Act 823 Means for Employers: Potential Conflict of
Laws and Regulations Governing Workplace Conduct

Georgia employers should consider legal guidance before
ignoring—or spending time and money following—the local
rules that Act 823 attempts to preempt. Act 823 is not the first
time the state has tried to preempt more restrictive local laws.
During the COVID-19 pandemic, Georgia’s governor issued
executive orders in an effort to stop local governments from
enforcing COVID-19 restrictions that conflicted with the
state’s more relaxed standards. In reaction, many cities,
including Atlanta, maintained that businesses and residents were
still required to follow local COVID-19 restrictions or else face
fines and shutdowns. Employers were left with the difficult
decision between compliance with costly local restrictions or
reliance on the state’s attempt to preempt those

Act 823 forces many Georgia employers into the same untenable
position. If your business is subject to local regulations
governing work hours, scheduling or work output, consult with an
attorney to plot the best path forward.

Additionally, Georgia businesses that have a presence in other
states should take heed that, while Georgia law attempts to prevent
local governments from regulating certain aspects of employment in
the state, other states allow local governments to regulate these
areas of private employment. These considerations are particularly
relevant to consider when drafting employment agreements and other
contracts that include a choice of law provision to govern disputes
that may arise between the employer and employee.

For More Information

If you have any questions about this Alert, please
contact Joseph A. Ciucci, Adam Keating, Christopher D. Kanne, Nicolette J. Zulli, any of the attorneys in our Employment, Labor, Benefits and Immigration
Practice Group
or the attorney in the firm with whom you are
regularly in contact.

Disclaimer: This Alert has been
prepared and published for informational purposes only and is not
offered, nor should be construed, as legal advice. For more
information, please see the firm’s

full disclaimer

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