09/08/2020
On Friday Governor Newsom signed AB-2257, which "cleans up" some of the confusion/concerns stemming from AB-5, the "independent contractor" legislation. The Labor Code will be amended, effective immediately and many occupations will now be held to the earlier (less restrictive) standard for determining whether an individual is an "employee" or an "independent contractor."
There are now exemptions for musicians, freelance writers, interpreters, translators and photographers. Significantly, all kinds of workers can now operate as self-employed professionals and can do business with each other. Agencies connecting freelancers with clients who handle the payments without supervising their work can still operate. For example, event planners who hire florists, makeup artists and musicians for a wedding will not now become their employers.
AB-5 adopted the "ABC test" as articulated in the "Dynamex" decision by the California Supreme court, which held that businesses must treat workers as employees unless they meet three conditions: (A) The worker is free from the company’s control, (B) the work they perform is not central to the company’s main business, and (C) they have established their own independent business in that line of work. This was problematic for many in the "gig" economy, who do work for themselves but may not have an "established" independent business. Figuring out what is and is not "central" to an employer's business was equally confounding.
We predicted that the law would evolve and it will continue to evolve. This legislation also does not affect the Uber/Lyft litigation as described in earlier posts. The pandemic put the brakes on lawsuits, where parties argue that the law should be applied in a certain way, but ultimately the courts will affect how the law is applied. The full text of the bill is included here. Feel free to contact us with your specific questions.
