The California worker classification bill, Assembly Bill 5 (AB 5), advanced closer to passage just prior to the Labor Day weekend.
Please recall, AB 5, which is Assembly member Lorena Gonzalez’s proposed legislation regarding worker classification (discussed below and in a prior article by Jackson Lewis here), was referred to the Senate Appropriations Committee suspense file on August 12, 2019. On Friday, August 30, the Appropriations Committee passed AB 5 and returned the bill to the Senate floor in a 5-2 vote. The Legislature has only until September 13, 2019 to pass the bill before the 2019 legislative session concludes.
If passed, AB 5 would codify the California Supreme Court’s Dynamex decision, wherein the court elected to abandon the longstanding multi-factor Borello test and adopt the “ABC Test” in determining whether an individual is an employee or independent contractor under the Wage Orders.
The ABC test elements are as follows:
(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact
(B) The person performs work that is outside the usual course of the hiring entity’s business; and,
(C) That the person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Part B of the test is particularly problematic for a number of industries, especially those with established business models reliant upon the use of contractors.
Jackson Lewis will keep you apprised of developments on this front. Please do not hesitate to contact us should you have any questions.