Introduced by Assemblywoman Lorena Gonzalez in January 2019, AB5 will implement
Dynamex’s
rigorous “ABC test,” requiring employers to prove their workers are actually independent contractors by satisfying all three of the following prongs:
A. The company must not be able to control or direct what the worker
does, either by contract or in actual practice; and
B. The worker must perform tasks outside of the hiring entity’s usual
course of the hiring entity’s business; and
C. The worker must be engaged in an independently established trade,
occupation, or business of the same nature as the work performed.
There are several licensed professions that are exempt from the bill, including private investigators.
AB5 was one of the most hotly debated bills by the Legislature this year. A number of powerful businesses, including Uber, Lyft and DoorDash, sought exclusions from AB5, and initiated an effort to get the issue on the ballot in 2020.
AB5 goes into effect January 1, 2020.
Governor Newsom agreed he would continue discussions with leaders from the Legislature, the labor movement, and the business community.
Employer Takeaway: Employers should take the time to examine their use of independent contractors, including independent contractor agreements, to ensure compliance with the ABC test, soon to be codified in the California Labor Code.
Have questions about your company’s use of independent contractors or any other pressing employment law issues? Your attorneys at Bradley & Gmelich LLP can help.