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How New California Employment Laws Protect Independent Contractors

In the fall of 2019, California Gov. Gavin Newsom signed Assembly Bill (AB) 5 into law. The primary goal of the legislation is to ensure independent contractors are properly protected under state and federal employment laws. Here, our San Francisco employment law attorneys explain the key things workers need to know about how new California laws protect independent contractors.

The Issue: Independent Contractors Lack Many Labor Protections

An independent contractor is an individual (or a company/organization), which provides goods or services to an employer. In recent years, more and more employers have been classifying a larger share of their individual workers as independent contractors. While certainly not inappropriate in every case, the trend created a problem: As many basic workplace rights are tied to a person’s status as an employee, independent contractors are vulnerable. Indeed, independent contractors are not entitled to a minimum wage, overtime pay, and many other labor protections.

The Solution: Enhance Protections by Extending Employee Classifications

Assembly Bill (AB) 5 is designed to enhance protections for independent contractors by ensuring that all workers are properly classified. In other words, AB 5 cracks down on the overreliance on independent contractors by California employers. Most importantly, AB 5 codifies the ‘ABC Test’ for worker classification in the state. To lawfully classify an individual worker as an independent contractor in California, a hiring entity (employer) must establish the following three things:

  1. Free From Control and Discretion: The worker must be free from the direct control by the employer. An independent contractor is hired to complete a task. If the employer retains too much control over how the worker does the task, then they must be classified as an employee.
  2. Outside the Normal Scope of Business: To be labeled as an independent contractor in California, the individual worker must be performing some sort of task that is outside the employer’s normal business operations.
  3. Independent Contractors Must Have a Trade: Finally, California’s ABC Test for worker classification requires an individual to have an independently established “trade, occupation, or business” to be deemed an independent contractor.

AB 5 is a complicated law. There are certain exceptions contained within the legislation and additional reforms were recently passed to make the law work better. For example, there are some unique rules in place for rideshare drivers. Still, the law provides strong protections to individuals classified as independent contractors. An employer must comply with the requirements of the ABC Test or re-classify the worker as an employee. If you believe your workplace rights were violated under AB 5, a San Francisco employment attorney can help.

Speak to an Employment Lawyer in the San Francisco Bay Area

At Bracamontes & Vlasak, our California employment lawyers have a deep understanding of the rules and regulations that protect your rights. If you have any questions about California’s new employment laws and independent contractors, we can help. Contact us today for a fully confidential review of your employment law case. We represent workers throughout the San Francisco Bay region, including in Oakland, Alameda, Sunnyvale, San Mateo and Daly City.

California Employment Laws