AB 5 Independent Contractors

AB 5 Independent Contractors / Photo by Austin Distel on Unsplash

Assemblywoman Lorena Gonzalez (D-San Diego) has introduced legislation (AB 5) that could end the rights of Californians to work as independent contractors.

The bill would add the “ABC test,” adopted by the California Supreme Court last April in the Dynamex decision, to state law. In that case, the delivery company had reclassified its drivers as independent contractors and had them use their own vehicles, following the lead of ride-hailing companies such as Uber and Lyft.  The ruling was made in favor of the drivers.

To be labeled an independent contractor, the following statements must apply:

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; and

C) The worker engages in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

This strict test could transform many independent contractors into employees, forcing them to lose the flexibility in their positions. AB 5 could effect numerous workers in the newspaper, hair styling, home care, construction, trucking, stripping and ride-hailing/delivery driver industry. Currently, drivers for Lyft and Uber can set their own hours and routes. This new legislation could change that flexibility.

As written, only four workers are exempt from the ABC test. They are insurance agents, financial advisors, doctors, and direct sellers. The California Chamber of Commerce has asked that any individuals who prefer to stay exempt should be allowed to do so.

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