The California Labor and Workforce Development Agency Secretary has created a website to provide resources and information to workers and employers on the Employment Status Law, or AB 5, which is set to take effect January 1, 2020.
The website, Labor.ca.gov/EmploymentStatus, provides information on AB 5 including the details of when and how this new law affects worker rights and employer obligations. The website also includes a FAQ page with information about the ABC Test and the California Supreme Court’s explanation of how to apply it.
AB 5 requires the application of the “ABC test” to determine if workers in California are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission (IWC) wage orders.
Under the ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Every employer-contractor relationship should be evaluated on a case-by-case basis to determine if a worker is in fact an independent contractor or considered an employee under the law. Therefore, it is highly recommended that you seek legal guidance to ensure you are in compliance with the law.
Coalition seeks fix
Associations representing the independent truckers and haulers lobbied the legislature extensively for an exemption from AB 5. Unfortunately these efforts were unsuccessful and independent truckers received no workable carve-out.
Now, a coalition led by the California Trucking Association is advocating for a legislative fix that will allow some 50,000 to 70,000 independent truckers to continue operating in California.
Because independent truckers are commonly contracted by growers and packers to haul fruit from the field to the packing house, AB 5 could have implications to existing contract arrangements.
California Citrus Mutual officials say they support efforts by the trucking industry to find a workable solution for truck owner-operators that allows them to continue operating under the current independent contractor model.
Under the new law, independent owner-operator truckers providing a service under the employer’s usual course of business would have to be considered an employee. Consequently, contracting entities must determine if they can continue utilizing independent haulers and truckers and still be in compliance with the law.
AB 5 will go into effect on January 1, 2020. As such, citrus growers and packers utilizing independent owner-operators should consult legal counsel to determine if existing contracts satisfy the ABC Test.