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Possible Corrections To AB 5 Introduced With Two New California Assembly Bills
Two California Assembly Bills were introduced very quickly after the rumble caused by California AB 5 since the Bill became law on January 1, 2020. California Assembly Bill 5 ratified the famous 2018 Dynamex court decision.
Public Domain whitehouse.gov
Many people in California do not think that AB 5 needs any correction.
An article from WorkCompCentral.com pointed out the two new bills’ introductions (behind a paywall). I will not load in both of the complete new bills. California always has a great useful Legislative Counsel’s digest at the top of most bills.
- AB 1925 appears first. The Bill attempts to exempt small businesses (less than 100 people) from AB 5.
- AB 1928 appears second. This Bill reverses the AB 5 Bill and Dynamex court decision and reverts to the S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) court case used to determine who is an independent contractor. Follow the link to the Bill to see the most redlines I have seen in a Bill in a long time.
- A comment that I found in a blog on these two Bills. The comment reeks of the confusion now in California.
Articles on the California Assembly Bills and other changes may be coming to your states if your company has no workers’ comp interests in CA. Some of AB 5 came from Massachusetts. Independent contractor determination Bills have been heavily produced across the nation over the last five years. (coming to a state near you).
These two Bills were introduced within one day of each other. The speed speaks volumes.
Introduced by Assembly Member Obernolte January 14, 2020
An act to amend Section 2750.3 of the Labor Code, relating to employment.
LEGISLATIVE COUNSEL’S DIGEST
AB 1925, as introduced, Obernolte.
Worker status: independent contractors: small businesses.
Existing law, as established in the case of Dynamex Operations W. Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates 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.
Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of specified wage orders.
Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business.
This test is commonly known as the “ABC” test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.
Existing law exempts specified occupations and business relationships from the application of Dynamex and these provisions. Existing law instead provides that these exempt relationships are governed by the test adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
This bill would expand the above-described exemptions to also include small businesses, as defined.
An act to amend Section 2750.5 of, to add Section 2750.7 to, and to repeal Section 2750.3 of, the Labor Code, relating to employment, and declaring the urgency thereof, to take effect immediately.
Introduced by Assembly Members Kiley and Melendez
(Coauthors: Assembly Members Fong and Gallagher)
(Coauthors: Senators Jones and Moorlach)
January 15, 2020
LEGISLATIVE COUNSEL’S DIGEST
AB 1928, as introduced, Kiley. Employment standards: independent contractors and employees.
Existing law, as established in the case of Dynamex Operations W. Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates 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.
Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of specified wage orders.
Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business.
This test is commonly known as the “ABC” test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.
Existing law exempts specified occupations and business relationships from the application of Dynamex and these provisions. Existing law instead provides that these exempt relationships are governed by the test adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d (Borello).
This bill would repeal those existing provisions and instead require a determination of whether a person is an employee or an independent contractor to be based on the specific multifactor test set forth in Borello, including whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired, and other identified factors. The bill would make related, conforming changes.
This bill would declare that it is to take effect immediately as an urgency statute.
Blog Comment Covers The Situation Well
This whole thing just seems awkward.
1. Dynamex for all Labor issues, but Borello for WC.
2. Dynamex for all Labor issues, and Dynamex for WC if there are more than 100 Employees, but Borello for Employers with under 100.
3. Dynamex for Labor and WC if there are more than 100 Employees, but Borello for both if there are less than 100.
This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.
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