Sec. 106. Change in classification; periodic classification review

492 words·~2 min read·/bill/119/s/4010/is/section-106

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If there is a major change in the nature of the economic relationship between a service provider payee and a service recipient payor, then a new classification determination shall be made by the service recipient payor or service provider payee responsible for classification determination pursuant to section 102(b) upon the major change in the nature of the economic relationship. For purposes of this section, a major change in the nature of the economic relationship means an increase or decrease of 25 percent or more in the hours worked by, or the compensation paid to, the service provider payee by the service recipient payor in the most recent calendar quarter compared to the previous calendar quarter.

If a reclassification determination is made, it shall be effective beginning on the first day of the first month that immediately follows the determination. If there is a change in the nature of the economic relationship between a service provider payee and a service recipient payor other than a major change in the nature of the economic relationship described in subsection

(a)that a reasonable person should anticipate could change the classification of a service provider payee, then the service recipient payor or service provider payee responsible for classification determination pursuant to section 102(b) shall make a classification determination upon the change in the nature of the economic relationship. Changes in the nature of the economic relationship included under paragraph

(1)include, without limitation— the loss of a license by a service recipient payee; the forfeiture of a business entity charter by a service recipient payee; a change in the relative importance of sales commissions in compensating a direct sales service provider payee; or a change in the requirement, or lack thereof, to perform services exclusively for the service recipient payor. If a reclassification determination is made, then it shall be made effective with respect to the calendar quarter that begins immediately after the date on which the event giving rise to the change in the nature of the economic relationship occurred. The service recipient payor or service provider payee responsible for a classification determination under subsection

(a)or

(b)shall make annual determinations for any continuing economic relationships with service recipient payors or service provider payees, as the case may be. These periodic reviews shall be completed by January 31 with respect to continuing economic relationships as of December 31 of the previous calendar year. If a reclassification determination is made as a result of this review, it shall be made effective beginning on the first day of the first month that immediately follows the determination. For purposes of this section, if a service provider payee does not have more than 100 hours worked or been compensated more than a total of $10,000 during a calendar quarter in which the reclassification determination is made, then the service provider payor or service provider payee, as the case may be, is exempt from the requirements of this section.