Posted February 2020 by S. Ward Heinrichs
Does Anyone Like AB5 and the ABC Test?
Remember the famously advertised line in the movie Poltergeist II? The little girl said about the ghosts that haunted her, “They’re back!” Well, I’ve posted articles, created advertisements, given speeches, and led discussions about AB5–the law that broadly applies the new ABC independent contractor test to the California economy. Like the ghosts in Poltergeist, “I’m back” with the latest, and it ain’t pretty!
As a refresher, the California Supreme Court ruled nearly two years ago that our Wage Orders required a new test to determine who is, and is not, an independent contractor under the Orders. It is called the ABC test because it has three elements. The hiring business must prove all three, or the worker will be an employee.
This is an abbreviated form of the test:
A. The worker is free from the control of the hirer.
B. The worker performs work that is outside the usual course of the hiring entity’s business.
C. The worker is customarily engaged in an independently established trade, occupation, or business.
Last year, the California Legislature decided to apply that same test to most employment laws, not just the Wage Orders. It also exempted many industries, jobs, and working relationships from AB5, but some of the exemptions are hard to apply. Now, many more workers and businesses in various job categories and industries want exemptions, or less limiting ones. In many cases, they are fighting for them!
Uber, Lyft, and DoorDash have started the process of putting an initiative on the ballot. If passed, it will exempt App based rideshare and delivery drivers. You can view the initiative and other information at: protectdriversandservices.com.
Uber also recently tweaked its business model. Now, the Rideshare App will offer a price range for rides, and the driver gets to select the final price!
Uber and Postmates have filed a lawsuit claiming that AB5 violates Equal Protection and Due Process under the Federal and California constitutions. Essentially, they appear to be saying that the law is unconstitutionally unfair and irrational.
Truckers have convinced a judge to issue a restraining order against AB5, because it arguably violates the Federal Aviation Administration Authorization Act (FAAAA). That Act prohibits states from interfering with trucking prices, routes, and services. AB5 may affect all three.
Freelance journalists and photojournalists filed a lawsuit claiming that AB5 violates the Constitutional protections of Free Speech and Freedom of the Press. As of now, I do not know of any major rulings in that case.
In my practice, I have spoken to many different businesses about AB5. Most have serious concerns about how that law will affect their business models and drive up costs. Some of those businesses are in the following industry niches: Court Interpreters, HR Consultants, Hair Dressers, Tattoo Artists, IT Companies, Dance Studios, Yoga Instructors, Personal Trainers, Nursing Consultants, and more.
The legislature has said it will continue to work with certain industries and industry leaders to fix exemptions and potentially add more; however, because the law has been in effect since January 1, certain businesses and workers already feel the pinch. Many are mad and do not want to wait for the legislature to act. That is why they are turning to the courts and ballot box. They do not like AB5!
S. Ward Heinrichs, Esq.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 408-7543 (fax)