California Legislature Considers Two Bills Related to Independent Contractor Misclassification
Two competing bills related to the classification of workers are in play in the California legislature.
California Assembly Bill No. 5, introduced by Democratic Assembly Member Lorena Gonzalez, would add to state law the “ABC test” adopted unanimously by the California Supreme Court in April 2018 in its decision in Dynamex Operations West, Inc. v. Superior Court, which involved a delivery company that converted all of its drivers from employees to independent contractors. The California Supreme Court sided with the drivers and established the ABC test, which places the burden on the employer to show that a worker is an independent contractor. As such, a worker can be classified as an independent contractor only if all three of the following factors are met:
(A) “that the worker is free from control and direction” of the employer as it relates to performance of the work; and
(B) that the work is performed “outside the usual course of the hiring entity’s business”; and
(C) that the worker engages “in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.”
On the other side of the aisle is a bill proposed by Republican Assembly Member Melissa Melendez, California Assembly Bill No. 71, which would, among other things, add a new section to the California Labor Code codifying the factors to be used to determine the status of an employee (i.e., the Borello factors).
This new section, 2750.7, would provide, in part, the following:
“(a) Notwithstanding any other law, a determination of whether a person is an employee or an independent contractor for the purposes of this division shall be based on the multifactor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations.
(b) These factors include, but are not limited to, the following:
(1) Whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired, which is the principal factor.
(2) Whether the one performing services is engaged in a distinct occupation or business.
(3) The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision.
(4) The skill required in the particular occupation.
(5) Whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work.
(6) The length of time for which the services are to be performed.
(7) The method of payment, whether by the time or by the job.
(8) The right to discharge at will, without cause.
(9) Whether or not the work is part of the regular business of the principal.
(10) Whether or not the parties believe they are creating the relationship of employer-employee.”