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  • Independent Contractor or Employee? California’s Worker Classification Law Revised - Update

    Only last year California’s biggest labor law development was the new worker classification law, AB 5, which codified the California Supreme Court’s Dynamex ruling that largely departed from the longstanding common law factor-based approach to determining whether a worker is an independent contractor and established the more stringent ABC test in its place. AB 5 also created numerous industry exceptions to the ABC test, which, if various conditions were met, the old common law test would apply instead. This year, AB 2257 adds more industry exceptions and some revisions to California’s worker classification law, which are now in effect.

    Controversy has followed AB 5 ever since it went into effect on January 1, 2020, with several lawsuits still pending. Early in this year’s legislative session, over 30 bills were introduced to either repeal or revise AB 5, but in the end, in no small part due to the COVID-19 pandemic, only one bill survived and was signed into law, AB 2257. AB 2257 went into effect when signed on September 4, 2020. The bill doesn’t change the ABC test or much of AB 5’s underlying framework but revises and clarifies some of the existing industry exceptions and adds new ones. While we can’t cover all numerous changes to the law here, here are a few of the highlights.

    AB 2257 made some revisions to AB 5’s business-to-business exception — one of the most widely criticized provisions since its enactment. For example, under AB 5, a business service provider had to actually contract with other clientele besides the contracting business in order to qualify for the exception. Under AB 2257, the business service provider must be able to contract with other clientele but doesn’t actually need to have existing clientele for the exception to apply.  Read More