Assembly Bill 5 (AB 5) has emerged as a landmark piece of legislation, fundamentally transforming the landscape for independent contractors and the companies that hire them. The law’s implications have been vast and varied, affecting a wide range of industries, from ride-sharing and delivery services to creative professions like writers and musicians. In general, it has expanded workers’ rights, ensuring more people receive basic protections like the minimum wage and unemployment insurance.
However, some groups are not enthused about how AB 5 has impacted businesses. In fact, some companies have banded together with state legislators to attempt to have the law repealed. If this occurs, it could seriously threaten California workers’ right to fair employment classification. Here’s what you need to know about AB 5, how it protects you, the controversies the bill continues to face, and what you can do to ensure you receive fair treatment at work.
What Is AB 5?
Signed into law in September 2019 and taking effect on January 1, 2020, AB 5 codified and expanded the California Supreme Court’s 2018 decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. This ruling introduced the “ABC” test to determine whether workers should be classified as employees or independent contractors.
According to the ABC test, for a worker to be considered an independent contractor, the hiring entity must prove three things:
- Autonomy: The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
- Business Distinction: The worker performs work that is outside the usual course of the hiring entity’s business.
- Customary Engagement: The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Controversies and Impact
The implementation of AB 5 has sparked a significant debate among various stakeholders. Proponents argue that the law protects workers from exploitation by ensuring access to employment benefits and protections, including minimum wage, overtime, unemployment insurance, and workers’ compensation.
Critics, however, contend that AB 5 imposes rigid constraints on the gig economy, stifling flexibility and innovation. Many independent contractors express concern that the law could force them into traditional employment roles, stripping them of the autonomy and flexibility that define freelance work. Additionally, businesses argue that the increased operational costs due to reclassifying workers as employees could lead to higher prices for consumers and potentially the downsizing of their workforce.
Legal Challenges and Exemptions
Since its inception, AB 5 has faced a slew of legal challenges, particularly from gig economy giants like Uber and Lyft, which argue that the law fundamentally misunderstands the nature of their business models. The pushback has led to legislative amendments and court rulings that have exempted certain professions from the law’s requirements or adjusted its application.
Moreover, Proposition 22, a ballot initiative passed in November 2020, allowed app-based transportation and delivery companies to classify their drivers as independent contractors, albeit with some concessions regarding benefits. This outcome highlighted the contentious and complex nature of labor laws in the modern economy.
Finally, as recently as January 2024, the fight to repeal AB5 and reduce workers’ rights continued. California Assemblywoman Kate Sanchez, R-Rancho Santa Margarita, announced her intent to file a new bill to repeal AB 5 statewide. While the bill is a long shot, it demonstrates that the fight for fair employment in the gig economy is far from over.
Protecting Your Rights Under AB 5
For the moment, AB 5 remains the law of the land in California. If you want to protect your right to fair employment classification, you need to understand the law and know how to respond if your employer violates your rights. Here’s what you can do to make sure you receive fair classification in the workplace:
1. Understand the ABC Test
First and foremost, you must understand the ABC test, which AB 5 uses to determine employment status. Understanding the criteria of this test helps you assess whether you might be incorrectly classified as an independent contractor when you should be an employee with access to benefits and protections.
2. Know Your Rights and Benefits
Under California law, employees are entitled to various benefits and protections that independent contractors are not. These include minimum wage, overtime pay, unemployment insurance, workers’ compensation, sick leave, and more. Knowing these rights can help you spot when you’re being denied benefits you’re entitled to.
3. Documentation and Record-Keeping
Maintain detailed records of your work hours, communications with the company you’re working for, and any contracts or agreements made. This documentation can be crucial if you need to challenge your classification or seek legal recourse.
4. Seek Clarification from Employers
If you believe there’s a discrepancy in your classification, start by discussing your concerns with your employer. Sometimes, misclassification is unintentional and can be resolved internally once brought to the employer’s attention.
5. File a Complaint
If you believe you’ve been misclassified and cannot resolve the issue with your employer, you can file a complaint with the California Labor Commissioner’s Office. This step can initiate an investigation into your employment status and potentially lead to the correction of your classification and compensation for any benefits or protections you were denied.
7. Legal Action
In cases where an employer persistently violates the law, seeking legal counsel may be necessary. Employment lawyers can offer advice, represent you in disputes, and help navigate the complexities of labor law to ensure your rights are protected.
Don’t Let Your Employer Misclassify You – Talk to the Law Offices of Todd M. Friedman, P.C.
AB 5 represents a significant shift in the way labor laws are applied to the gig economy, aiming to protect workers but also sparking controversy and debate about the nature of work and employment in the 21st century. While the law remains in place, it’s crucial to understand and fight for your right to fair classification. If you believe you’ve been misclassified by your employer, the Law Offices of Todd M. Friedman, P.C., can help. Schedule your consultation with our skilled employee misclassification lawyers to learn more.
