However, there are potential downsides to expecting them to adhere to the new standards in the way they do their jobs. For example, being a driver for a ride-sharing or delivery company is a great choice for choosing when and when not to work. Why is employee classification such a controversial issue? Employees are eligible for minimum wage, overtime pay, and other benefits, such as . B reimbursement of business expenses in California. Employers who incorrectly classify employees as independent contractors could therefore pay for wages, overtime bonuses, meal and rest penalties, and more. Independent contractors are not eligible for such benefits, but they generally have more flexibility to set their own schedules and work for multiple companies. In the 2018 Dynamex case, the California Supreme Court ruled that companies must use a tripartite test (called the ABC test) to determine whether workers should be classified as employees or independent contractors. This test assumes that employees are employees, unless the company hiring them can prove the following three things. Occupational exemptions: Under AB 5, certain occupations have been excluded from the ABC test, including physicians, lawyers, dentists, licensed insurance agents, accountants, architects and engineers, private detectives, real estate agents and hairdressers. AB 2257 expands this list to include translators, appraisers, building inspectors and registered foresters. AB 2257 also removes AB 5`s 35 orders per year cap, allowing freelance writers, translators, photographers, videographers and illustrators to work as independent contractors, regardless of the number of orders received from a client. Early in the 2020 legislature, just days after AB 5 came into force, lawmakers began introducing bills to amend key provisions of the new law.

At the beginning of 2020, there were at least 31 different bills aimed at amending or repealing AB 5.6 over time, and over time, these bills have been distilled into a single vehicle: AB 2257. This bill has now been passed by the California legislature and is on its way to the governorship. Prior to the ABC test, the Borello test was used in California for about 30 years. In 2018, the California Supreme Court rejected the borello test to determine the status of an independent contractor and passed a new ABC test, Sarchet recalled. Uber and Lyft had defied that requirement, and on August 10, 2020, California Superior Court Judge Ethan Schulman ordered the companies to reclassify their contract drivers as employees with the same protections and benefits as their other employees. This would entitle them to benefits, unemployment, paid sick and family leave, and health insurance, among other things. “To highlight things, drivers are central and not tangent to all of Uber and Lyft`s ride-hailing business,” Judge Schulman wrote. The case was filed by the Attorney General of California, as well as prosecutors in the city-states of Los Angeles, San Diego and San Francisco. Last year, at the time, the California legislature debated AB 5. The law was based on an earlier California Supreme Court decision in Dynamex Operations West v Superior Court.1 In Dynamex, the court dropped the previous test, called the “Borello” test, which had focused on the alleged employer`s right to control the employee`s activities.2 Instead, the court borrowed from Massachusetts state law and imposed the ABC test on California companies. The court`s decision was limited to state wage orders.

Therefore, it would have been possible for the same employee to be an employee for the purposes of wage orders, but a contractor for the purposes of unemployment insurance, workers` compensation and other provisions of the Labour Code. The decision may also have been retroactive, an issue that is still under negotiation today. As a result, Dynamex left many questions unanswered and many members of the California business community were deeply concerned about the impact of the decision on their business. According to the new test, commonly referred to as the “ABC test,” an employee is only an independent contractor if the following three elements are met: As the Workplace Policy Institute requested a year ago, our company should look for ways to better address the structural problems that hinder innovation and growth. Employee engagement is a complex and time-consuming process, and complying with the myriad of labor and labor laws is a challenge. If greater flexibility were granted in the employer-employee setting, the independent contractor model might not be as attractive. Perhaps another model – something between employment and independent procurement (such as the status envisaged in Proposal 22) – is possible. “Customer” means: (A) a person who uses a referral agency to use the services of a service provider, or (B) a company that uses a referral agency to use services of a service provider that are not otherwise provided regularly by employees at Customer`s business site, or to order services that are outside the ordinary course of customer`s business.

Notwithstanding subparagraph (a), it shall be the responsibility of an undertaking which uses a reference agency to engage services in order to fulfil the conditions described in this subparagraph. The Borello test mainly took into account whether the hiring club or employee controlled the work. The test also assessed several secondary factors, such as . B such as the provision of workers with their own tools, the duration of the services provided and the supervision of work by the hiring company. The factors were assessed in their entirety, with no decisive factors. The employee is free to control and instruct the employer in the context of the work performed, both within the framework of the contract and in that of his life; The signing of California`s AB5 law affects many, but not all, businesses that rely on gig workers in California. More than 50 professions and types of businesses are exempt, including insurance agents, lawyers, real estate agents and certain types of business-to-business entrepreneurs and referral agencies. Businesses that are not exempt should take a closer look at how they classify employees and independent contractors to ensure they are not violating the terms of the law. .