Unless some recently filed lawsuits (including one by the California Trucking Association) are successful, classifying a worker as an independent contractor is about to become much more difficult in California.
The new law (AB-5), which will go into effect on January 1, 2020, codifies the ruling handed down by the California Supreme Court last year in Dynamex Operations West v. Superior Court of Los Angeles (2018) 4 Cal.5th 903. In that case, the Supreme Court established a new three-prong test for employers to “rely” upon when classifying workers as either employees or independent contractors. Under the new test, to be accurately classified as an independent contractor, a worker must be:
(i) free from control of the company;
(ii) performing work “outside the usual course of the hiring entity’s business” (i.e., a paint company can’t have an independent worker who’s a painter); and
(iii) engaged in an independently established trade, occupation, or business of the same nature as the work they are performing.
So who will this effect? Almost every independent contractor out there. From truckers, taxi drivers, Uber & Lyft drivers, to barbers/hairdressers, maids, janitors, and childcare workers.
Many professions (e.g., doctors, lawyers, accountants, real estate agents, etc.) are exempt from the new law.
We’ll keep you posted as things progress.