As proper worker classification remains in the spotlight, the standards by which a worker is properly classified as an independent contractor continue to confuse business owners and contingent workers alike. Conflicting federal and state guidelines applied by various government agencies and courts — think recent Uber and FedEx cases — have left both companies and workers scratching their heads.

What makes an independent contractor an IC? In August 2016, Arizona enacted the Declaration of Independent Business Status law in an attempt to provide clarity to this increasingly pertinent issue.

Under DIBS, workers in Arizona may sign a declaration to confirm their status as an independent contractor and create a rebuttable presumption that they are indeed classified properly. The law states that “any employing unit [i.e., business] contracting with an independent contractor may prove the existence of an independent contractor relationship … by the independent contractor executing a declaration of independent business status.” The DIBS must include certain affirmations from independent contractors that establish their status and describe the truly independent nature of the relationship, such as the contractors’ acknowledgment that they operate their own independent business, are responsible for providing their own tools and equipment, and are able to work with multiple clients during the engagement. In addition, contractors must acknowledge six out of 10 factors set forth in the DIBS that indicate a true independent relationship, such as acknowledgments they are not economically dependent on the services performed for the contracting party, and that the contracting party does not dictate the performance, methods or process the contractor uses to perform services.

Appearances can be deceiving. While DIBS appears to remove the ambiguity and confusion of proper worker classification challenging businesses in Arizona, that is not the case. Rather, DIBS creates a rebuttable presumption. Basically, a contractor who signs a DIBS is considered a properly classified independent contractor until that fact is contested. While we don’t yet know how the DIBS law will be adjudicated in court, think “innocent until proven guilty.” If someone’s innocence is contested, the accuser must prove that there is evidence contrary to such innocence. This rebuttable presumption works in a similar fashion. In Arizona, the introduction of a DIBS document will create a presumption that a proper classification has been made, unless it is contested and proved otherwise. If enough factors point to a worker being in fact misclassified as an independent contractor, the presumption is overcome by the contesting party. The contesting parties in this case could be the worker, the IRS or various state agencies.

It is important to understand what the law actually does and what it does not. First, it is only effective in Arizona; no rebuttable presumption is created by the signing of a DIBS in Colorado, for example. Second, it is effective only at the state level. The DIBS law does not replace the various independent contractor tests used by the IRS or Department of Labor. And the latter issued an administrative interpretation last year that stated there is a presumption that most workers are employees. So, at the federal level, the presence of a DIBS would likely be considered only one of the many factors contemplated during a worker classification lawsuit or an IRS audit.

Whether the DIBS law will actually help Arizona’s independent workers and the companies that use them better understand the nuances of proper worker classification is still up for speculation. It would be wise for businesses using independent workers, even in Arizona, to ensure that the DIBS is not the only factor upon which their classification is made.