California Assemblywoman Lorena Gonzalez, the author of California’s independent contractor legislation known as AB-5, has resigned to lớn work for the California Labor Federation (CLF).
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Just a few days into the new year, observers of labor policy received an unexpected gift of sorts on the 10th day of Christmas. Rather than ten lords a-leaping, however, it was the news on January 3 that California Assemblywoman Lorena Gonzalez, the author of California’s notorious independent contractor legislation known as AB 5, would resign her position within the week to lớn work for the California Labor Federation (CLF).
Considering that Gonzalez actively pushed organized labor’s agendomain authority as a legislator, perhaps her departure to lớn work for the CLF should not be surprising, và presumably, she will continue khổng lồ push that agenda as an employee. Nevertheless, at least this development means she cannot sponsor harmful legislation lượt thích AB 5.
As this blog has observed previously, AB 5 enshrined into lớn law a restrictive sầu standard for determining whether an individual can be classified as an independent contractor under California’s wage và hour law. It did so by modifying what is known as the ABC chạy thử, which some states use for evaluating potential employer-employee relationships.
Under the typical ABC kiểm tra, employers must satisfy all three parts to classify someone as an independent contractor. Importantly, the “B” prong states that one can be considered an independent contractor if “the service is performed either outside the usual course of the business for which it is performed or is performed outside of all places of business of the enterprise for which it is performed.”
In 2019, Assemblywoman Gonzalez introduced AB 5, which deliberately omitted the second element dealing with the location of the work performed, và the implication was immediately clear: businesses that procure the services of individuals who never even step foot into lớn the business’s physical location could no longer rely on that fact khổng lồ classify someone as an independent contractor.
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To be fair, AB 5’s modified ABC kiểm tra was first articulated by the California Supreme Court the prior year, but once it became a law, it applied to all employers across the state, many of whom relied on independent contractors in a wide range of businesses. As a result, AB 5 cast into lớn doubt many longstanding relationships.
More particularly, it forced employers khổng lồ reclassify erstwhile independent contractors as employees, which meant they would have lớn provide overtime, provide at least the minimum wage, be responsible for payroll taxes, và incur vicarious liability for them, aước ao other things. If they failed lớn vì so, employers could—và did—incur stiff penalties. It also meant that some workers lost the flexibility they had taken for granted, or worse, lost work entirely.
The law’s new standard unleashed considerable mayhem on Californians và upended countless individuals’ lives and livelihoods. In short, the result was a debacle that forced the legislature to enact several more bills exempting various industries that AB 5 threatened khổng lồ destroy. It also prompted a ballot initiative, which voters passed lớn limit the ill effects of the law. As AB 5’s author bids adieu those ill effects will live sầu on, though, which isn’t exactly an enviable legacy.
Sean P. Redmond
Vice President, Labor Policy
Sean P.. Redmond is Vice President, Labor Policy at the U.S. Chamber of Commerce.