On January 1, 2020 a new law – AB 5 – took effect in California. Immediately, the effects of the legislation were felt across California’s workforce, as well as its legal climate. It’s clear now that this assembly bill is nothing more than an experiment gone wrong and that it must be eliminated.
AB 5 was written by San Diego Assemblymember Lorena Gonzalez. It codifies into law the Supreme Court of California case, Dynamex Operations West Inc. v. The Superior Court of Los Angeles County. Dynamex created a new ABC test that serves to determine whether a worker should be classified as an employee instead of an independent contractor. By design, the test results in millions of California independent contractors being reclassified as employees.
What does it mean to be reclassified as an employee as opposed to an independent contractor? Ultimately, the reclassification is for wage and hour laws purposes. This could mean workers compensation, social security taxes, Medicare taxes, disability insurance and health benefits – none of which come into play for an independent contractor – all fall to the company. In other words, it is far more expensive to hire an… Read More