Blog / The Business Perspective
Redefining California's business model
August 14, 2019
by Maria S. Salinas
Our state lawmakers returned from summer recess this week and are back at work on a variety of legislative matters. Always vigilant on legislation that impacts the business community, the Chamber tracks these matters and works with our state representatives to lend our voice. One such matter is AB 5, proposed to codify the Dynamex decision impacting business/individual relationships into law.
Last year’s Dynamex Operations West, Inc. v. Superior Court of Los Angeles drastically changed the business relationship for many companies and individuals. The court handed down a new “ABC test” for determining whether a worker is an employee or an independent contractor. Essentially, the court adopted a standard presuming all workers are employees instead of contractors and placed the burden on any entity classifying an individual as an independent contractor of establishing that such a classification conforms with the newly adopted “test.”
While Dynamex had to do with the classification of delivery drivers, it was clear the ruling would have a major impact on the jobs provided by the “gig economy.” However, the breadth of the decision also means it applies to many other workers who have traditionally been independent contractors, such as providers of professional services, barbers and licensed health care professionals.
The legislation includes a number of exemptions so that certain professions can continue as contractors. The Chamber has advocated for exemptions for industries that rely on the flexibility and independence of this type of work. You can see the current language and exemptions HERE.
The Chamber is working with a coalition of several other business groups advocating for additional amendments, including a broader exemption for professionals, a business-to-business exemption and the ability to contract for short-term projects. I urge you to reach out and contact your state representatives, as well as the members of the Senate Appropriations Committee to share your concerns and thoughts on AB 5, which will redefine the business model for many companies and change the work structure for countless Californians.
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