Employment Classification Law Could Benefit California Workers

| Apr 10, 2020 | Employee Classifications, Wage and Hour |

California’s AB5 law is a victory for workers across the state. That’s especially the case for victims of labor exploitation. For years, labeling workers as independent contractors allowed companies to avoid paying some workers benefits like paid sick leave, employment taxes, health insurance and obtaining workers’ compensation insurance.

However, under this new law, businesses have more restrictions as to who they can and can’t classify as independent contractors.

Dynamex court case played a role

AB5 stemmed from a drawn-out case between a delivery service and truck drivers who worked for them. Initially, Dynamex Corporation hired delivery drivers as employees. However, as of 2004, it converted all their drivers’ statuses to independent contractors to save money. In 2005, the drivers filed a class-action lawsuit against the company, claiming their job duties didn’t fall in line with their employment classification as independent contractors.

After years of court battles, the California Supreme Court held that Dynamex’s’s practices were considered unlawful. The decision has since helped shape California’s current labor classification policies.

Employers must now use the ABC test to label workers

Due to these changes, businesses must use the ABC test for classifying workers as independent contractors. If employers want to classify workers in this manner, they must prove that:

  • They don’t control how the worker performs tasks.
  • The worker’s tasks don’t play an essential function in business operations.
  • The worker provides the services themselves as an independent and established trade.

However, these rules don’t apply to professions where workers can set their own rates for services like doctors, lawyers, private investigators and other professions.

California workers finally have the voice they deserve

For years, countless California workers felt powerless when dealing with big business. And while AB5 could provide value for workers in the long-run, some employers are taking drastic steps to avoid compliance. If that’s the case, a knowledgeable and diligent legal partner can help.