Employee or Independent Contractor?

It Isn’t Just Uber: California Prepares for New Gig Worker Rules…and Confusion 

California

From The Wall Street Journal, Christine Mai-Duc and Lauren Weber provide an excellent overview of the challenges and issues facing independent contractors and the companies that engage with them in California with the implemetation of AB5. Christine and Lauren write:

The debate around Assembly Bill 5, or AB5, as it is known, largely centered on gig-economy workers such as ride-share and food-delivery drivers. It requires employers to reclassify many of them as employees rather than independent contractors, giving them access to minimum wage and overtime laws, workers’ compensation coverage and paid sick days.

However, just weeks before the law goes into effect on Jan. 1, employers and workers in other industries including truck drivers, therapists, and entertainers say it is unclear how AB5 will affect them, leading some to take precautionary measures and others to say they hope a court will clarify the matter soon.

How the outstanding questions about AB5 get resolved in the coming months could have national implications, as lawmakers in other states including New York and New Jersey consider similar legislation.

“There’s just a lot of fear, chaos, confusion about how this law is going to impact people,” said Chris Shimoda, vice president of government affairs for the California Trucking Association. The organization has filed a suit arguing federal laws governing trucking and interstate commerce exclude truck drivers. A hearing is scheduled for Dec. 30.

Uber and Lyft, along with several other gig economy companies, have put together more than $100 million to spend on a ballot measure that would exempt them from the law. They argue AB5 could force them to raise prices, introduce hourly schedules and make other changes that take away the flexibility they say many drivers want.

More than 2.8 million Californians earned income in 2016 for nonemployee work, including freelance projects, independent contracting and gig-economy labor such as ride-share driving, according to economists who analyzed Internal Revenue Service data. That is nearly 14% of workers in the state who filed taxes or received tax documents from employers and clients.

“AB5 is going to radically change any industry in California that uses independent contractors or freelancers,” said Tricia Legittino, a California-based partner with law firm Frankfurt Kurnit Klein & Selz PC.

Among the concerns of her corporate clients, she said, is whether the law applies retroactively, which would allow workers to sue employers for classifying them as independent contractors in prior years. That question will be argued in a case set to be heard before the California Supreme Court.

Read the full story at It Isn’t Just Uber: California Prepares for New Gig Worker Rules…and Confusion – WSJ

Back to Top