ARTICLE
Back in November 2019 we wrote about Assembly Bill (AB 5), a bill that was signed by Governor Gavin Newsom with the intent of drastically altering California’s labor laws when it went into effect in the New Year. January 1, 2020 has now come and gone which leaves us wondering…what is happening with the implementation of AB 5 in the meantime? As a refresher, AB 5 came out as a way to codify the 2018 California Supreme Court Dynamex decision that ultimately created a new set of rules for how to determine what constitutes an independent contractor versus an employee. AB 5 codifies this ruling. With a few exceptions to the rule - such as doctors, architects and accountants (Cal Matters) - gig workers that had previously been independent workers should now be considered employees and receive the host of benefits that come with the title. The companies that immediately come to mind when we think about “gig” are Lyft, Uber, Postmates, DoorDash and others with similar purposes, who are comprised almost entirely of independent workers. Needless to say, company executives are not happy with the changes to California labor law, while the workers themselves are split between those in favor in regular hours, wages and benefits, and those who actually enjoy the freedom and flexibility of their contractor status (Cal Matters). In the interim, several lawsuits have been filed claiming AB 5 is unconstitutional. Uber and Postmates are of course among those who are challenging the law, while less suspecting industries such as freelance journalism and trucker associations are also entering the fight. AB 5 sets limits for freelance writers, editors and photographers and prohibits them from submitting more than 35 works to a media outlet in a year. This will make it harder for these freelancers to make a living and will create difficulties for smaller news outlets in their search for content. In response, several freelance groups have filed suit challenging AB 5 (Capitol Weekly). The California Trucking Association and Western States Trucking Association also filed suits opposing AB 5 because most truck drivers who own and drive their own trucks want to remain as independent contractors. Before the first of the year the court granted truckers a temporary restraining order on AB 5 enforcement, making them temporarily exempt from the law. On January 13, 2020, the order was extended until a final ruling is made on the preliminary injunction (Heavy Duty Truckers). A petition to change the language of AB 5 has also been cleared for circulation by the Attorney General. The petition will require 623,212 signatures and proposes that drivers who are currently considered independent contractors receive alternative benefits instead of full employee status. These alternative benefits would include healthcare subsidies, minimum compensations, vehicle insurance as well as sexual harassment and safety training (CA Secretary of State). It will be interesting to track their progress as the deadline approaches, the last day to get signatures is June 30, 2020. But the state does not plan to let the fight against AB 5 end too easily. Governor Newsom recently announced that he will budget $20 million to be used for enforcement of the new legislation (LA Magazine). It is also likely that an updated version of the legislation will be introduced during the second session of the Legislature. The lines of power, policy and politics in our State Capitol are pitting the labor community against the tech community and there are other industries that are caught in the middle as unintended victims of this change in California labor law. In conclusion, we do not yet know the final fate of the independent contractor or how their fate is ultimately tied to California’s economy. If the petition qualifies for the November ballot, this will be a political wedge issue and California voters might have the last word on this change. Only time will tell.
Back in November 2019 we wrote about Assembly Bill (AB 5), a bill that was signed by Governor Gavin Newsom with the intent of drastically altering California’s labor laws when it went into effect in the New Year. January 1, 2020 has now come and gone which leaves us wondering…what is happening with the implementation of AB 5 in the meantime? As a refresher, AB 5 came out as a way to codify the 2018 California Supreme Court Dynamex decision that ultimately created a new set of rules for how to determine what constitutes an independent contractor versus an employee. AB 5 codifies this ruling. With a few exceptions to the rule - such as doctors, architects and accountants (Cal Matters) - gig workers that had previously been independent workers should now be considered employees and receive the host of benefits that come with the title. The companies that immediately come to mind when we think about “gig” are Lyft, Uber, Postmates, DoorDash and others with similar purposes, who are comprised almost entirely of independent workers. Needless to say, company executives are not happy with the changes to California labor law, while the workers themselves are split between those in favor in regular hours, wages and benefits, and those who actually enjoy the freedom and flexibility of their contractor status (Cal Matters).
In the interim, several lawsuits have been filed claiming AB 5 is unconstitutional. Uber and Postmates are of course among those who are challenging the law, while less suspecting industries such as freelance journalism and trucker associations are also entering the fight. AB 5 sets limits for freelance writers, editors and photographers and prohibits them from submitting more than 35 works to a media outlet in a year. This will make it harder for these freelancers to make a living and will create difficulties for smaller news outlets in their search for content. In response, several freelance groups have filed suit challenging AB 5 (Capitol Weekly).
The California Trucking Association and Western States Trucking Association also filed suits opposing AB 5 because most truck drivers who own and drive their own trucks want to remain as independent contractors. Before the first of the year the court granted truckers a temporary restraining order on AB 5 enforcement, making them temporarily exempt from the law. On January 13, 2020, the order was extended until a final ruling is made on the preliminary injunction (Heavy Duty Truckers).
A petition to change the language of AB 5 has also been cleared for circulation by the Attorney General. The petition will require 623,212 signatures and proposes that drivers who are currently considered independent contractors receive alternative benefits instead of full employee status. These alternative benefits would include healthcare subsidies, minimum compensations, vehicle insurance as well as sexual harassment and safety training (CA Secretary of State). It will be interesting to track their progress as the deadline approaches, the last day to get signatures is June 30, 2020.
But the state does not plan to let the fight against AB 5 end too easily. Governor Newsom recently announced that he will budget $20 million to be used for enforcement of the new legislation (LA Magazine). It is also likely that an updated version of the legislation will be introduced during the second session of the Legislature. The lines of power, policy and politics in our State Capitol are pitting the labor community against the tech community and there are other industries that are caught in the middle as unintended victims of this change in California labor law. In conclusion, we do not yet know the final fate of the independent contractor or how their fate is ultimately tied to California’s economy. If the petition qualifies for the November ballot, this will be a political wedge issue and California voters might have the last word on this change.
Only time will tell.