Brigette Honaker  |  September 20, 2019

Category: Labor & Employment

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Independent contractor agreement on clipboardA recently passed California work law will make it difficult for businesses to classify workers as independent contractors as opposed to employees.

Assembly Bill 5 formally enacts a decision that was reached in the Dynamex lawsuit last year. In Dynamex, the California Supreme Court created the three-part test which workers have to pass in order to be classified as an independent contractor.

Before Dynamex, businesses could classify workers as independent contractors based on their control over the work done. However, the court decision implemented the stricter “ABC Test.” Under this test, businesses must show that the following conditions apply to a worker:

  • The worker is free from the employer’s control;
  • The worker performs job duties outside of the employer’s primary business; and
  • The worker is regularly engaged in their hired trade independent of the work they do for the employer.

If all of these conditions apply, an employer can classify their workers as independent contractors. If not, their workers are considered traditional employees.

Although the Supreme Court decision only initially set these regulations, Assembly Bill 5 will expand the requirements to other benefits including unemployment and worker’s compensation. California Governor Gavin Newsom is reportedly expected to sign the bill into law.

“The governor is supportive of addressing the misclassification of workers, which for decades has been a driver of income inequality,” a spokesman for the governor told the Los Angeles Times.

Some jobs were granted exceptions to this new law, including doctors, hairdressers, and private investigators. Around 150 industries reportedly lobbied for an exemption from the new California work law, with only 50 succeeding.

The change in law may result in many lawsuits as businesses adjust, or fail to adjust, to the new regulations. The new regulations may provide a better outcome for many employees who may feel shortchanged by their current independent contractor status.

Independent contractors differ from regular employees in that they are not subject to labor laws and regulations. This means that businesses are not required to pay independent contractors minimum wage or provide other benefits required by these laws. Instead, these workers may be paid for a service or can be paid hourly for a contracted service. Independent contractors are still required to pay taxes.

Although there are benefits to being an independent contractor, namely the freedom to do work on your own schedule, some workers feel that they are wrongfully being denied the pay and benefits of a full employee.

Unfortunately, employees who were previously classified as independent contractors, including drivers for Lyft, Uber, and DoorDash, may need to continue the fight for their employee rights. These companies attempted to exempt themselves from the new California work law and are reportedly campaigning for a ballot initiative. However, Steve Smith, communications director for the California Labor Federation, says that this ballot initiative may be a “tough sell.”

“California voters believe very strongly in workers’ rights, and I don’t think they will take kindly to Uber and Lyft trying to spend tens of millions of dollars to carve themselves out of the law when so many of their workers are struggling,” Smith told Law360.

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5 thoughts onCalifornia Work Law to Redefine Independent Contractor Requirements

  1. ANTHONY CARVAJAL says:

    I was a dasher and an uber eats driver and got “deactivated” from both. Doordash staff was really rude to me as well. And they deactivated because I got upset with them.. (of course that is not the official reason they give…)

    Uber deactivated me because they said I was late on orders too many times.. but they also did not adequately warn me .. (as they say they did)

    1. Anthony C says:

      please remove my full name (leave last initial only) on my comment here..

  2. Jerry Taylor says:

    Over 4,500 rides with screwber and over 1,500 with Lyft. I did not opt out of screwbers contract in time because I didn’t know that was an option. Until the class action started. I got in my car and was ready to get a customer but the contract came up on my screen and couldn’t go on line till I accepted the contract. I started to read it but it was very long, so I accepted without reading the entire thing.
    When I started with them, the base rate was $1.40 a mile plus time. Then they dropped the rates 20%, then again another 20% then again, 10%.
    I’m sure they were trying to put Lyft out of business. It put me out of business.
    Then Lyft claimed that a rider reported that I was going 100 miles an hour. They probably was looking at kilometers per hour because I never went over the speed limit if I had a rider in the car. They had no proof of course but deactivated me without any way for me to prove that I was doing the speed limit. Time it took to travel the distance would have proved my speed.
    Then I started with a courrier as independent contractor even though I was to start first route at noon and be back to the lab by 3:00 and started second route at 8:00PM and was required to be back by midnight.
    Then one night I called in to report that I was at first pick up at 8:00 and was told to go home. IDDX didn’t want me doing any more routes.
    They at that time owed me around $5,000 for 5 weeks pay. I had to take out payday lines to put gas in the car to work.
    Needless to say, I have been homeless since then and now unemployed.
    There’s a lot more to the saga.

  3. Phillip Cooper says:

    I was an independent construction inspector 2000 to 2004 to LA County Sanitation District. I was under contract through an engineering firm that only paid our agreed wage and travel expenses, but took all work direction / schedule / training from LACSD.

  4. Jason A Franklin says:

    I was a Door Dasher and 4 weeks ago I had my account deactivated. The claim was Food Tampering. I have never tampered with anyone’s food in the 4 months I was Dashing. At one point I was a top Dasher of the month and then all of a sudden my account is deactivated due to tampering? I filed an appeal and it literally took 3 weeks to get a response from anyone in regards to the appeal. They failed to show me any evidence of any sort as well as their Dasher Support was extremely unproductive and disrespectful.

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