The “ABC test” on the gig economy (e.g., Uber and Lyft drivers) is trending in the media. Elliot Dinkin reveals that AB5 will affect almost all companies who rely on independent contractors in California — and other states are expected to soon follow California’s lead.
On September 18, 2019, the California governor signed into law a bill that will expand last year’s California Supreme Court decision regarding independent contractor status in California (Dynamex v. Superior Court). The court made it much more difficult for employers to legally classify their workers as independent contractors. Assembly Bill 5 (AB5), which will take effect on January 1, 2020, codifies the ABC test and extends its reach to numerous additional California employment laws.
Under the ABC test, a worker is deemed an employee unless the hiring entity establishes each of the following:
A — the worker is free from the direction and control of the company; and
B — the worker performs work that is outside the company’s main business; and
C — the worker normally performs work in an independent business or trade that is in the same vein as the work he or she is performing for the company.
The reach of the decision will extend beyond California’s wage laws. Benefits will be impacted, including workers’…
