Georgia’s new labor laws are changing the definition of employment and restricting local laws governing working hours

Georgia Gov. Brian Kemp has signed into law two employment relationship laws. The first, Law 809 (HB 389), changes the definition of employment for unemployment benefit purposes. The second, Law 823 (SB 331), prevents local governments from regulating the working hours or working hours of a private company’s employees.

Law 809: Classification of Workers for Unemployment Benefit Purposes

Law 809 aims to expand the types of workers who may be eligible for unemployment benefits. However, it also ensures that the nature of the work of the individual ultimately determines the existence of an employer-employee relationship. Law 809 goes into effect on July 1, 2022.

In Georgia, only people who qualify as “employees” can qualify for unemployment benefits. Freelancers are not entitled to such benefits. Act 809 changes the definition of employment to include any service provided by a person for remuneration. Under this definition, the majority of workers would be considered “employees” unless the Georgia Department of Labor determines otherwise. Based on Act 809’s expanded definition of employment, more workers may be able to receive unemployment benefits from a company.

Under the new law, a person is not considered an “employee” only if it can be demonstrated that the person is free from control or direction over the provision of services to a company and is commonly engaged in an independent trade, profession, vocation, or business. In making this determination, the following seven factors should be considered:

  • ability to work for other companies or hold other employment at the same time;
  • Freedom to accept or decline work assignments without consequences;
  • lack of a minimum number of hours of work or orders to be obtained;
  • ability to set their own work schedule;
  • Lack of supervision or direction regarding the services to be provided;
  • lack of territorial or geographic restrictions; and
  • Absence of an obligation to perform, behave or act in a certain manner in connection with the provision of services.

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

For Georgia businesses, the classification of a worker as an “employee” or “independent contractor” is more important than ever. Act 809 creates an enforcement mechanism by imposing a civil penalty payable to the Georgia Department of Labor if a company misclassifies its workers. Under the new law, the commissioner determines the amount of the civil penalty by assessing the number of people misclassified and the frequency of misclassifications.

Therefore, Georgian companies must take into account the classifications assigned to each of their workers.

Law 823: Exclusion of Local Governments from Making Certain Laws

Law 823 prevents local governments from enacting laws that regulate private company hours, scheduling, or employee performance. The measure came into force on May 5, 2022.

Law 823 is Georgia’s latest attempt to lure businesses into the state by preventing local governments from enacting restrictive wage and hour laws. Georgian law already prohibits cities and local governments from passing laws that apply to private employers. These laws govern matters such as the minimum wage, overtime, employee benefits, and pay related to change of dates.

Law 823 amends the existing law to prohibit local governments from enacting laws that would apply to private employers and regulate work hours, scheduling and employee performance.

Meanwhile, in many other states, local governments have enacted local ordinances addressing these issues. Governor Kemp and the state legislature want to clearly distinguish the state from the laws of those other states and local governments.