All too often, we hear of the misclassification of employees as independent contractors for employers to bypass worker’s rights regulations and benefits. This January, Assembly Bill 5 went into effect that aims to protect freelancers and independent contractors and clear up classification issues.
The “gig economy” is growing, as people seek out convenient ways to make money in their free time. However, companies are using this worker-employee dynamic to dance around benefits that employees are entitled to. App-based employers like Uber and Lyft are spending big bucks on fighting AB 5, more than $100 million, and expected to invest much more in preventing further state legislation on employee classification.
What Does AB 5 Say?
AB 5 aims to provide a roadmap (via an ABC test) to determine if a worker should be classified as an employee or an independent contractor. It states that a person can be considered an independent contractor if all three prongs are met:
A) The person is free from the control and direction of the hiring entity in connection with the performance of the work.
B) The person performs work that is outside the usual course of the hiring entity’s business; and
C) The person is customarily engaged in an independently established trade, occupation, or business.
There are more than thirty exceptions that are listed aside from the ABC test. If the case falls under one of those exceptions, then the court should use the analysis applied in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).
The Borello test is quite complicated. The initial rule of an employment relationship under Borello has to do with the "right to control." The test states whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired. The Borello test lists several secondary factors that may or may not apply depending on the circumstances of the case.
As you can see, the ABC test, together with Borello, create for some complex and confusing rules when it comes to classification. It is crucial that if you believe that you have been misclassified as an independent contractor that you contact an experienced employment attorney. They will be able to listen to the facts of your case and explain if AB 5 applies.
If you are an independent contractor but believe AB 5 may impact your classification, contact The Law Offices of Tanya Gomerman. Call 415-545-8608 to speak with an employment attorney who can guide you on what next steps to take.