ABC Test Independent Contractor Earthquakes!


ABC TEST INDEPENDENT CONTRACTOR EARTHQUAKES!
By Ward Heinrichs Esq., San Diego Employment Attorney

On Big Blend Radio, San Diego employment attorney Ward Heinrichs discusses the new legislation for California’s ABC Independent Contractor Test that’s used to determine which workers are independent contractors and which are employees. 

Did you feel that huge earthquake last year?  It was called the Dynamex quake, and almost every business shook when it hit. Dynamex was a California Supreme Court ruling that changed the definition of Independent Contractor.  The result: many more workers will not qualify as independent contractors, and, accordingly, will be employees!

Now, the California legislature is passing a new law that will apply the ABC test far more broadly.  When it passes, that will be the second ABC earthquake.  It will shake the business world much more severely than the first quake.

The Assembly has passed an ABC bill and the Senate is considering it now.  In contrast to the new legislation, the Dynamex case only applied the ABC test to the California Wage Orders.  They regulate a few things such as: minimum wage, overtime, meal periods, rest periods, reporting pay, etc.  The legislation will apply the ABC test to many more employment laws and regulations.  So, misclassified independent contractors will be able to make claims under other laws, such as: workers’ compensation, unemployment, wage statement requirements, sick pay, regular unpaid wages greater than minimum wage, and the other laws in the Labor Code.


The Fair Employment and Housing Act (FEHA) does not clearly define “employee”, but some caselaw supports the idea that any worker defined as an employee elsewhere will be an employee under FEHA.  If that holds true in the context of the new legislation, then FEHA would protect the newly defined employees from discrimination, harassment, retaliation and grant them other FEHA rights.


The ABC test requires a business to meet each of the three elements of the test.  If it fails to meet one element, then California will consider the worker to be an employee.  The three elements are:

  1. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the work and in practice.
  2. That the worker performs work that is outside the usual course of the hiring entity’s business.
  3. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed for the hiring entity.

We do not know exactly what the California ABC legislation will look like when it passes, but we have some good indications from the Assembly bill that has already passed, AB5.  Some businesses and professions it exempted are: insurance agents, investment advisers, direct sellers, real estate agents, hairstylists, barbers, doctors, dentists, lawyers, architects, engineers, accountants, podiatrists, veterinarians, private investigators, repossession agencies, freelance writers who meet specific criteria, and HR specialists and marketers with advanced degrees.  The Senate will probably add more exemptions to that list.

Hold tight California and get ready for another big earthquake!

Based in San Diego, California the Employment Law Office of Ward Heinrichs represents both employers and employees in almost all areas of labor law. He and his firm litigate cases that have been filed in many different parts of California. Visit www.BestEmploymentAttorneySanDiego.com

Law Offices of Ward Heinrichs

 

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About the Author:

Based in San Diego, California the Employment Law Office of Ward Heinrichs represents both employers and employees in almost all areas of labor law. He and his firm litigate cases that have been filed in many different parts of California.

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