According to a report in the San Francisco Chronicle, hundreds of thousands of independent contractors, from Uber and Lyft drivers to manicurists, could become employees under AB5.
What This Means
The bill applies three-part criteria known as the “ABC test” to determine whether a worker is a contractor or an employee. To be an independent contractor, the worker must be free from a company’s control, do work not central to the company’s business, and have an independent business in the trade. The bill’s author, Assemblywoman Lorena Gonzalez, a Democrat from San Diego, said companies often classify workers as independent contractors to dodge providing them minimum wage, overtime, workers’ compensation, disability, and other benefits.
Gonzalez and proponents of this bill believe the law will provide workers with basic job protections. So far, the bill exempts doctors, dentists, lawyers, architects, accountants, engineers, insurance agents, investment advisers, real estate agents, direct sellers, hairstylists who rent booths as salons, and marketers and human-resources professionals who hold advanced degrees. Business lobbyists are attempting to get more exemptions, including for Uber and Lyft drivers, freelance writers, graphic designers, and other job categories.
Understanding the ABC Test
So, what makes a worker an employee? Under this bill, it’s a three-part standard known as the ABC test. A worker is an independent contractor only if all three of the following apply:
- Control: The company hiring the worker does not direct how the work is done.
- Scope: The work is in a field different from the hiring company’s business.
- Independence: The worker runs a business doing the same kind of work for the hiring company.
Our California employment attorneys will closely watch this bill, which could become law and change California’s employment landscape. This is a much-needed law in California, where the “gig economy” has taken over. While temporary jobs provide autonomy to workers because they can pick and choose when and how they want to work, they also impact the benefits and wages they receive. Many gig workers miss out on crucial benefits such as healthcare.
Our law firm has pursued several large companies that have misclassified full-time employees as contractors in an attempt to avoid paying them their due wages and benefits. If this law is passed, lawmakers should also institute significant fines for violators so the law is properly followed and enforced.
Source: https://www.sfchronicle.com/business/article/California-Assembly-passes-gig-work-bill-13904777.php
