Home California Gig Economy Bill Moves Bill Forward that Protects Workers from Misclassification

Gig Economy Bill Moves Bill Forward that Protects Workers from Misclassification

by ECT
Lorena Gonzalez

The California State Assembly voted Wednesday to pass legislation authored by Assemblywoman Lorena Gonzalez (D-San Diego) to codify the California Supreme Court’s Dynamex decision and protect workers from being misclassified as independent contractors.

The assembly voted was 59 to 15 in favor of the bill which now moves onto the State Senate.

Under the bill, it will now make it harder for companies to label workers as independent contractors versus employees–a practice used to get around state and federal labor laws.

Since the bill expands the Dynamex Supreme Court Decision, busineses now use the “ABC” test to figure out if a worker is an employee or contractor:

(A) that the worker 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; and

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

For companies that provided “gig” jobs, such as Uber, Postmates and others, it would make it difficult for them to classify workers as “contractors”. By calling them employees, they now would have to pay certain taxes, benefits, overtime, or minimum wages.

Assemblywoman Gonzalez released the following statement after the vote:

“Big businesses shouldn’t be able to pass their costs onto taxpayers while depriving workers of the labor law protections they are rightfully entitled to. This legislation is an important work-in-progress to provide certainty to California’s businesses, provide protections for California’s workers and guard the taxpayers from subsidizing unscrupulous corporations.”

Under Assembly Bill 5:

This bill would state the intent of the Legislature to codify the decision in the Dynamex case and clarify its application. The bill would provide that the factors of the “ABC” test be applied in order to determine the status of a worker as an employee or independent contractor for all provisions of the Labor Code and the Unemployment Insurance Code, unless another definition or specification of “employee” is provided. The bill would codify existing exemptions for specified professions that are not subject to wage orders of the Industrial Welfare Commission or the ruling in the Dynamex case. Because exempt specified professions from these provisions and instead provide that the employment relationship test for those professions shall be governed by the test adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 if certain requirements are met. These exempt professions would include licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, a direct sales salesperson, real estate licensees, workers providing hairstyling or barbering services, and those performing work under a contract for professional services. The bill would require the State Board of Barbering and Cosmetology to promulgate regulations for the development of a booth rental permit and a reasonable biennial fee upon workers providing specified hairstyling or barbering services, by no later than July 1, 2021.
Because this bill would expand the categories of individuals eligible to receive benefits from, and thus would result in additional moneys being deposited into, the Unemployment Fund, a continuously appropriated fund, the bill would make an appropriation. The bill would state that these changes do addition of the provision to the Labor Code does not constitute a change in, but are is declaratory of, existing law with regard to violations of the Labor Code relating to wage orders of the Industrial Welfare Commission.

 

How they voted

DateResultLocationAyesNoesNVRMotion
05/29/19(PASS)Assembly Floor59156AB 5 Gonzalez Assembly Third Reading
Ayes: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Cervantes, Chau, Chiu, Chu, Cooper, Daly, Diep, Eggman, Frazier, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O’Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Weber, Wicks, Wood, Rendon
Noes: Bigelow, Brough, Chen, Choi, Dahle, Fong, Gallagher, Gray, Kiley, Lackey, Melendez, Obernolte, Patterson, Voepel, Waldron
No Votes Recorded: Cooley, Cunningham, Flora, Eduardo Garcia, Mathis, Mayes

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