On February 27, 2020, the California Assembly voted on whether to allow for an emergency vote on Assembly Bill 1928. If AB1928 had been brought to a vote and passed, it would have taken effect immediately as an urgency statute to repeal the so-called “ABC test” set forth in the 2018 California Supreme Court case Dynamex Operations W. Inc. v. Superior Court. As we previously reported, the Dynamex ABC test was codified in AB5, which took effect on January 1, 2020 and which creates a difficult standard for businesses to meet in order to classify a worker as an independent contractor instead of an employee.
Prior to the passage of AB5, the ABC test was limited to claims made under the Industrial Wage Order; it did not apply, say, to claims made under the Labor Code for failure to reimburse business expenses. For non-Wage Order claims, the less stringent (but still robust) multi-factor independent contractor test set forth in S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations applied. Now, under AB5, the ABC test applies to claims brought under the Labor Code and the Unemployment Insurance Code. (For more details on AB5, please refer to our 2020 New Laws publication.)
Two-thirds of the assembly members would have needed to vote in favor of bringing AB1928 to an emergency vote, which would have allowed the Legislature bypass the lengthy procedure required to bring a bill forward for a regular vote. AB1928’s primary advocate and author, Kevin Kiley, explained that an emergency measure was necessary given the disastrous effects that AB5 has already had on California workers, hundreds of thousands of whom found themselves without a source of income overnight.
Voting largely along party lines, the assembly declined to suspend AB5 on an emergency basis. Though AB1928 could still come up for a vote at a later time, AB5 continues to be in effect for the foreseeable future. Given the strong opposition to holding an emergency vote on AB1928, it appears that most California politicians are likely to vote against AB1928 even if it comes up for a regular vote.
Though many individuals in California are still willing to work as independent contractors, it is important to keep in mind that, unfortunately, people cannot choose their own classification status, nor can they contract around it – i.e., a person cannot sign something agreeing to be classified as an independent contractor. Thus, if an employer misclassifies someone as an independent contractor (even if the person states they want to work as one), the employer will still be exposed to hefty fines and taxes, and the employer will face significant exposure if the individual later decides to file a wage and hour claim or lawsuit. Accordingly, employers are advised to speak with an attorney before utilizing any independent contractors, as most of them would likely be considered employees under AB5.