California Mandates Employment Classification for Many Workers, Codifying Dynamex’s ABC Test

Recommendations for employers before new law goes into effect on January 1, 2020

TAKEAWAYS

On September 18, 2019, California Governor Gavin Newsom signed into law a bill making it risky for employers (regardless of size) to classify many types of workers as independent contractors.

As employees, these workers will be subject to and protected by California’s workplace rules, including overtime, meal and rest breaks, paid sick leave, paid family leave, payroll withholdings, unemployment insurance, workers’ compensation, and other local and municipal regulations.
Contingent-workforce industries, founded in the Silicon Valley, were unsuccessful in their attempt to thwart the legislation, which is the most aggressive in classifying workers as employees in the country.

California Governor Gavin Newsom signed into law Assembly Bill 5—sweeping legislation that requires most “gig economy” workers to be treated as employees, effective January 1, 2020. The law impacts not only tech giants in the gig economy, but also applies to many traditional contract workers such as truckers, software coders, janitors and exotic dancers, among many others. Multiple industries and occupations secured exemptions to the law, but they still must comply with the traditional tests for independent contractor status.