Articles Posted in Independent Contractors

In September 2019, the state of California passed a law that made it more difficult for employers to classify workers as independent contractors. The law was received with much criticism because “nonsensical exemptions” for only a select professions.

The state legislature is back at it for 2020. On September 4, 2020, Governor Newsom signed AB 2257, which clarifies California’s independent contractor laws. The stringent ABC test remains the default standard, but there are now more exemptions for California business owners to learn thanks to heavy lobbying efforts. Well, not every lobbying effort created results. Gig economy companies, franchising, trucking and the motion picture and television industries all stuck out in receiving exemptions.

The new exemptions that were created by AB 2257 include:

As expected, the legal battles over AB5 (California’s Independent Contractor Law) have begun.

The American Society of Journalists and Authors and the National Press Photographers Association have filed a lawsuit challenging AB-5 on constitutional grounds (First and Fourteenth Amendment), as the law only allows 35 submissions per year for the same publication without becoming an employee.

In November 2018, the California Trucking Association is challenging AB5 on the basis that it runs afoul of federal law which prohibits states from enforcing any law related to the price, route, or service of a motor carrier.

On September 18, 2019, Governor Gavin Newsom signed into law, Assembly Bill 5 (“AB5”), codifying the landmark case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), which made it more difficult for employers to classify workers as independent contractors.

Dynamex, and now AB5, establish a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. In addition, AB5 reaffirms the 3-part test of Dynamex, commonly known as the “ABC” test, to establish that a worker is an independent contractor.

Under the ABC Test, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that:

In April 30, 2018, the world of employment law was shaken by the decision of the California Supreme Court to apply a stricter standard for determining whether a worker was an employee or independent contractor. The new standard, set forth in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, is known as the ABC Test.

Soon after the California Supreme Court published its landmark decision of Dynamex Operations W. v. Superior Court, (2018) 4 Cal. 5th 903, 962 (“Dynamex”), the law firm of Davis & Wojcik APLC experienced an influx of employer consultations at a rate never before experienced by a single court ruling. The immediate application of the ABC Test caught many employers by surprise, and they were eager to know how Dynamex would impact their business. Their concern was well-founded.

Immediately after the Dynamex decision was published, the employment world was left wondering whether the ABC Test would be applied retroactively. Thanks to the U.S. Court of Appeals for the Ninth Circuit, we now have an answer.

The Independent Contractor classification may not be dead, but it is seriously wounded. The California Supreme Court recently announced a new test for determining whether a worker is an employee or an independent contractor in the landmark decision of Dynamex Operations West, Inc. v. Superior Court of Los Angeles, No. S222732 (Cal. Sup. Ct. Apr. 30, 2018).

Under the new Dynamex decision, a hiring entity classifying an individual as an independent contractor now bears the burden of establishing that such a classification is proper under the “ABC test.” To do so, the entity must prove each of the following three factors:

(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;

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