New Independent Contractor Law California 2020

The new independent contractor law in California has been a hot topic of discussion in the business world. This law, which went into effect on January 1, 2020, is designed to protect workers who are classified as independent contractors. The new law creates a stricter standard for determining whether a worker is an independent contractor or an employee, which could have significant implications for businesses in California.

The law, known as AB 5, codifies the «ABC test» used by the California Supreme Court in the Dynamex Operations West, Inc. v. Superior Court of Los Angeles case in 2018. This test presumes that workers in California are employees unless all three of the following conditions are met:

A) The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact;

B) The worker performs work that is outside the usual course of the hiring entity`s business; and

C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Under the new law, workers who do not meet all three of these criteria must be classified as employees, instead of independent contractors. This means that they are entitled to minimum wage, overtime pay, and other benefits and protections under California law.

The law has generated a lot of controversy, primarily because it could drastically impact the gig economy in California. Companies like Uber, Lyft, and DoorDash, which rely on independent contractors to provide their services, have been particularly vocal in their opposition to the law. They argue that the law will force them to reclassify their drivers as employees, which will result in higher costs for the companies and lower earnings for the drivers.

However, supporters of the law believe that it will protect workers who are currently being exploited by companies that misclassify them as independent contractors. The law is designed to ensure that workers receive the same benefits and protections as employees, which will help to level the playing field and create a fairer and more equitable economy.

Overall, the new independent contractor law in California is a significant change that will have far-reaching implications for businesses and workers alike. Companies that rely on independent contractors will need to carefully evaluate their business practices and make adjustments to comply with the law. Meanwhile, workers who have been misclassified as independent contractors will finally have access to the protections and benefits they deserve.