*Red font in the legislation and regulation indicates changes from previous reporting

California- AB 5 (Independent Contractors)

Issue: Employees and Independent Contractor Status and Classification

Affects:  The requirements for being classified as an independent contractor

Send comments to: Regan Ratliff, rratliff@phta.org

Bill Summary:  This bill was recently amended and now also seeks to exempt certain professions from the provisions set out by ‘ABC’ test used to determine the status of a worker as an employee or independent contractor.

Those performing work under a contract for professional services shall be exempt from these provisions and instead be governed by the test adopted in S.G. Borello & Sons, Inc. v. Department of Industrial Relations.

This bill still addresses the 2018 Dynamex Operations West Inc. vs. Superior Court of Los Angeles case, surrounding what standards apply in determining whether workers should be classified as employees or as independent contractors for the purposes of California wage orders. 

Existing law from this case now requires the “ABC” test be applied when determining when a worker is an independent contractor for all provisions of the Labor Code and the Unemployment Insurance Code.

The Unemployment Insurance Code also makes it a crime to violate specified provisions of law with regard to benefits and payments. 

Worker Classification Summary outlined in this bill:

Except where a statutory exemption from employment status or an exemption from a particular obligation related to employment applies or where a statutory grant of employment status or a particular right related to employment applies, for purposes of the provisions of this code and the Unemployment Insurance Code, and for the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee unless the hiring entity demonstrates that all of the following conditions are satisfied:

(1)  The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(2)  The person performs work that is outside the usual course of the hiring entity’s business.

(3)  The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

The addition of this section to the Labor Code by this act does not constitute a change in, but is declaratory of, existing law with regard to violations of the Labor Code relating to wage orders of the Industrial Welfare Commission.

There have been several amendments to this bill.  PHTA members are encouraged to look through the bill and let the Government Relations team know if there is a concern with the language.

Status: This bill passed the Assembly May 29th and has been referred to the Senate Committee on Appropriations. 

7/11/2019 Bill version: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB5 

5/24/2019 Bill version: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB5

Pool and Spa News Article:  https://www.poolspanews.com/business/legal-regulatory/california-bill-addresses-independent-contractor-change_o?utm_source=newsletter&utm_content=Article&utm_medium=email&utm_campaign=PSN_041119&