Western Electrical Contractors Association, Inc.

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Can You See 2020? Are You Ready? Content Courtesy of WECA Industry Partner Cook Brown, LLP

Thursday, January 02, 2020

In the world of employment law, staying ahead of constantly evolving laws and workplace legislation is important. In the new year, California employers will want to be sure they are ready for these key legislative changes related to employment.

Independent Contractor Status - AB 5

Assembly Bill 5, also known as the "Gig Economy Bill", imposes a new test for determination of employment status and impacts companies that employ independent contractors in California. It adopts the "ABC test" for determining independent contractor status which was articulated by the Supreme Court in a case decided in 2018, Dynamex Operations West v. Superior Court of Los Angeles. AB 5 expands the Dynamex ruling to apply the "ABC test" to all provisions of the Labor Code and Unemployment Insurance Code, unless otherwise stated. It provides important exemptions for certain industries, including construction, real estate agents, doctors, attorneys, architects, engineers and accountants.

Determining Employment Status

To minimize independent contractor risk, employers should address each factor in the "ABC test" to determine if a worker is an independent contractor.
  • "A" Factor: Is the worker free from the control and director of the hiring entity?
  • "B" Factor: What is your business? Is the contractor doing something integral to your business? Would an outsider view them as working within your business?
  • "C Factor": What type of business is your contractor engaged in?
Businesses that utilize independent contractors on any regular basis to perform tasks that are an integral part of their operations may be compelled to transition these workers to employees. Read this article for more information on the new test for determining employment status.

To read more and view a handy video, click here.