AB 5 — Worker status: employees and independent contractors.

Summary

Existing law, as established in the case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex) , creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law requires a 3-part test, commonly known as the "ABC" test, to establish that a worker is an independent contractor for those purposes. Existing law, for purposes of unemployment insurance provisions, requires employers to make contributions with respect to unemployment insurance and disability insurance from the wages paid to their employees. Existing law defines "employee" for those purposes to include, among other individuals, any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee. This bill would state the intent of the Legislature to codify the decision in the Dynamex case and clarify its application. The bill would provide that for purposes of the provisions of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity's business, and the person is customarily engaged in an independently established trade, occupation, or business. The bill, notwithstanding this provision, would provide that any statutory exception from employment status or any extension of employer status or liability remains in effect, and that if a court rules that the 3-part test cannot be applied, then the determination of employee or independent contractor status shall be governed by the test adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello) . The bill would exempt specified occupations from the application of Dynamex, and would instead provide that these occupations are governed by Borello. These exempt occupations would include, among others, licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, direct sales salespersons, real estate licensees, commercial fishermen, workers providing licensed barber or cosmetology services, and others performing work under a contract for professional services, with another business entity, or pursuant to a subcontract in the construction industry. The bill would also require the Employment Development Department, on or before March 1, 2021, and each March 1 thereafter, to issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. The bill would make the exemption for commercial fishermen applicable only until January 1, 2023, and the exemption for licensed manicurists applicable only until January 1, 2022. The bill would authorize an action for injunctive relief to prevent employee misclassification to be brought by the Attorney General and specified local prosecuting agencies. This bill would also redefine the definition of "employee" described above, for purposes of unemployment insurance provisions, to include an individual providing labor or services for remuneration who has the status of an employee rather than an independent contractor, unless the hiring entity demonstrates that the individual meets all of specified conditions, including that the individual performs work that is outside the usual course of the hiring entity's business. Because this bill would increase the categories of individuals eligible to receive benefits from, and thus would result in additional moneys being deposited into, the Unemployment Fund, a continuously appropriated fund, the bill would make an appropriation. The bill would state that addition of the provision to the Labor Code does not constitute a change in, but is declaratory of, existing law with regard to violations of the Labor Code relating to wage orders of the Industrial Welfare Commission. The bill would also state that specified Labor Code provisions of the bill apply retroactively to existing claims and actions to the maximum extent permitted by law while other provisions apply to work performed on or after January 1, 2020. The bill would additionally provide that the bill's provisions do not permit an employer to reclassify an individual who was an employee on January 1, 2019, to an independent contractor due to the bill's enactment. Existing provisions of the Labor Code make it a crime for an employer to violate specified provisions of law with regard to an employee. The Unemployment Insurance Code also makes it a crime to violate specified provisions of law with regard to benefits and payments. By expanding the definition of an employee for purposes of these provisions, the bill would expand the definition of a crime, thereby imposing a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.

Bill Text

• Chaptered 09/18/19 - Chaptered Current pdf September 18, 2019
• Enrolled 09/16/19 - Enrolled pdf September 16, 2019
• Amended 09/06/19 - Amended Senate pdf September 06, 2019
• Amended 08/30/19 - Amended Senate pdf August 30, 2019
• Amended 07/11/19 - Amended Senate pdf July 11, 2019
• Amended 05/24/19 - Amended Assembly pdf May 24, 2019
• Amended 05/01/19 - Amended Assembly pdf May 01, 2019
• Amended 03/26/19 - Amended Assembly pdf March 26, 2019
• Introduced 12/03/18 - Introduced pdf December 03, 2018
• AB5 View text html

Action History

1. September 18, 2019

   Chaptered by Secretary of State - Chapter 296, Statutes of 2019.

2. September 18, 2019

   Approved by the Governor.

3. September 17, 2019

   Enrolled and presented to the Governor at 11 a.m.

4. September 11, 2019

   Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 61. Noes 16. Page 3375.).

5. September 11, 2019

   Assembly Rule 77 suspended. (Page 3370.)

6. September 10, 2019

   In Assembly. Concurrence in Senate amendments pending. May be considered on or after September 12 pursuant to Assembly Rule 77.

7. September 10, 2019

   Read third time. Passed. Ordered to the Assembly. (Ayes 29. Noes 11. Page 2770.).

8. September 09, 2019

   Read second time. Ordered to third reading.

9. September 06, 2019

   Read third time and amended. Ordered to second reading.

10. September 03, 2019

    Read second time. Ordered to third reading.

11. August 30, 2019

    Read second time and amended. Ordered returned to second reading.

12. August 30, 2019

    From committee: Amend, and do pass as amended. (Ayes 5. Noes 2.) (August 30).

13. August 12, 2019

    In committee: Referred to APPR. suspense file.

14. July 11, 2019

    Read second time and amended. Re-referred to Com. on APPR.

15. July 10, 2019

    From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 4. Noes 1.) (July 10).

16. June 12, 2019

    Referred to Com. on L., P.E. & R.

17. May 30, 2019

    In Senate. Read first time. To Com. on RLS. for assignment.

18. May 29, 2019

    Read third time. Passed. Ordered to the Senate. (Ayes 59. Noes 15. Page 2071.)

19. May 24, 2019

    Read third time and amended. Ordered to third reading. (Page 1984.)

20. May 24, 2019

    Assembly Rule 69 suspended. (Page 1969.)

21. May 23, 2019

    Ordered to third reading.

22. May 23, 2019

    Action rescinded whereby the bill was read third time and amended.

23. May 23, 2019

    Read third time and amended.

24. May 20, 2019

    Read second time. Ordered to third reading.

25. May 16, 2019

    From committee: Do pass. (Ayes 13. Noes 3.) (May 16).

26. May 16, 2019

    Joint Rule 62(a), file notice suspended. (Page 1760.)

27. May 15, 2019

    In committee: Set, first hearing. Referred to APPR. suspense file.

28. May 13, 2019

    Joint Rule 62(a), file notice suspended. (Page 1609.)

29. May 02, 2019

    Re-referred to Com. on APPR.

30. May 01, 2019

    From committee chair, with author's amendments: Amend, and re-refer to Com. on APPR. Read second time and amended.

31. April 04, 2019

    From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 0.) (April 3). Re-referred to Com. on APPR.

32. March 27, 2019

    Re-referred to Com. on L. & E.

33. March 26, 2019

    From committee chair, with author's amendments: Amend, and re-refer to Com. on L. & E. Read second time and amended.

34. March 25, 2019

    Referred to Com. on L. & E.

35. December 04, 2018

    From printer. May be heard in committee January 3.

36. December 03, 2018

    Read first time. To print.

Sponsors

• Rendon · Cosponsor
• Gloria · Cosponsor
• Ash Kalra · Cosponsor
• McCarty · Cosponsor
• Medina · Cosponsor
• Buffy Wicks · Cosponsor
• Maria Elena Durazo · Cosponsor
• Leyva · Cosponsor
• Skinner · Cosponsor
• Juan Carrillo · Cosponsor
• Mia Bonta · Cosponsor
• Jeff Gonzalez · Primary
• Mark Stone · Cosponsor

Votes

Subjects