AB 5 Worker Status: Independent Contractors
California Assemblywoman Lorena Gonzalez (D-San Diego) has introduced legislation intended to strengthen employee rights and define the role of an independent contractor.
The bill (A.B. 5), would add to state law the “ABC test” regarding independent contractors. The test was adopted unanimously by California’s Supreme Court in the case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex) in an April decision.
The court ruled in favor of workers when Dynamex, a package and documents delivery company, converted all of its drivers to independent contractors to save money. In its decision, the court sided with the drivers and established the three part “A-B-C” test, which requires workers to be classified as independent contractors if:
A) The worker is “free from control and direction” of the employer as it relates to performance of the work.
B) The work is performed “outside the usual course” of the hiring entity’s business.
C) The worker engages in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.
It’s time to review who you have classified as an independent contractor vs an employee based against the above criteria.
If you have questions or concerns, an excellent resource is California Lawyers for the Arts.