California: AB 5 Updates for Independent Contractors

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On January 1, 2020, AB 5 went into effect. It essentially codified the ruling in Dynamex Operations West, Inc. v. Superior Court, which implemented an ABC test for determining whether a worker is an employee or an independent contractor. However, the bill also broadened the application of the ABC test and add a slew of exemptions for certain types of workers under certain circumstances.

Since the bill was signed, there has been a flurry of activity surrounding its application and exemptions. Most significantly, on January 16, 2020, a federal district court issued a preliminary injunction against enforcing AB 5 against independent truck drivers on the basis that the bill may be preempted by federal law. On January 8, 2020, in a separate lawsuit brought by the Los Angeles City Attorney against a group of logistics companies for misclassification, a California Superior Court judge stated that AB 5 did not apply to owner-operator truck drivers because they are subject to federal law. There is also a legal challenge pending by freelance writers and photographers on how AB 5 applies to them.

Additionally, the California Labor & Workforce Development Agency recently announced a resource website available to employers, employees, and government agencies with information on the ABC test, an FAQ, and information on labor laws.

Some may be asking – what does the future hold? Certainly, expect to see continued challenges to the bill, and perhaps even more expansion of the exceptions. Interestingly, the state Attorney General released a proposed ballot measure that, if it receives enough signatures, may allow Californians to vote in November on whether to exempt app-based transportation providers and delivery drivers from AB 5. Employers should continue to look for updates on this law as it is expected to be an ongoing shifting landscape.

Action Items

  1. Review independent contractor classifications with legal counsel.
  2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2020 ManagEase

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