Governor Newsom signed Assembly Bill (“AB”) 5 into law this week, which expands and clarifies the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. (For a quick summary on the Dynamex decision, click on the following link:
AB-5 will help to ensure workers who work in the “gig economy” are entitled to the same benefits of those who are classified as W-2 employees by requiring employers to apply the ABC test created in the Dynamex case. According to the ABC test, in order for an employer to legally classify a worker as an independent contractor, it must prove the worker is free from the control and direction of the hiring entity, performs work outside the scope of the entity’s business and is regularly engaged in work of some independently established trade or other similar business.
This is a major blow to big companies like Uber and Lyft, who have vowed to do whatever it takes to keep its drivers independent contractors. At the same time, this is a huge victory for California workers, because it will ensure all workers are protected under the provisions of the Labor Code, Fair Employment and Housing Act, and other similar laws.
AB-5 will go into effect January 1, 2020. If you have been misclassified as an independent contractor by your hiring entity, call our knowledgeable attorneys for a free consultation. 818-405-0080.