Tuesday, January 7, 2020

"Request for cleanup" bill submitted by sponsor of misguided AB5

The blowback from the "unintended consequences" of California's AB5 law -- that has effectively eliminated independent contracting (unless your profession managed to get an exemption) -- is astonishing, and the heat of an enormous segment of freelancers who are now losing contracts and work because of the sledgehammer ABC test has forced the law's sponsor to respond -- with a feeble admission the law is poorly written. See my earlier post.

AB 1850, as introduced by Lorena Gonzalez, does not propose to suspend enforcement of AB5 to stabilize the negative impact on the state economy, it merely asks that the legislature to clarify how it is implemented...

AB 1850, as introduced, Gonzalez. Employee classification.
Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of specified wage orders. 
Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business. This test is commonly known as the “ABC” test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification. 
Existing law exempts specified occupations and business relationships from the application of Dynamex and these provisions. Existing law instead provides that these exempt relationships are governed by the test adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. 
This bill would declare the intent of the Legislature to enact legislation that would further clarify the application of the California Supreme Court’s decision in Dynamex and recently-enacted requirements under the Labor Code. 
SECTION 1. It is the intent of the Legislature to enact legislation that would further clarify the application of the California Supreme Court’s decision in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 and requirements under Section 2750.3 of the Labor Code.

That's it. After all, with each passing quarter, independent contractors who are now "employee" must be paid, and taxes are required to be withheld by these newly minted "employers". What would retroactivity mean for state withholdings gathered under AB5 if the "employees" go back to being independent contractors?

And we STILL have the open question of why AB5 was needed when SB459 was already on the books? It makes it illegal to misclassify employees as independent contractors -- with stiff fines. It was never used. (https://tinyurl.com/r9u7rzo)

HISTORY: Gonzalez was confronted on the floor by Senator Jeff Stone's on September 10, 2019 during debate on AB5 and the infamous exemption request form (produced by the AFL-CIO, labeled on its bottom). It's worth your watch. Skip to 9:06. (via Karen Anderson of Freelancers Against AB5).

Good reads...

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