The impact of California’s new legislation aimed at changing how workers are classified will be met with resistance from some of the state’s top tech companies, and ultimately a ballot initiative that could be the talk of the 2020 election.
Gov. Gavin Newsom signed Assembly Bill 5 into law on September 18, which has changed the legal test for determining whether gig economy workers are employees. The bill codified the “ABC Test” from the California Supreme Court decision in Dynamex v. Superior Court, which says that a worker is probably an employee if they provide work that is in the usual course of the hiring entity’s business.
Why is that important? That would mean that these new employees would arguably be subject to workers’ compensation coverage.
In other words, if a worker does not meet all of the following three conditions, then they are an employee for purposes of workers’ compensation law:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work;
- The worker performs work that is outside the usual course of the hiring entity’s business;
- The worker is customarily engaged in an independently established trade, occupation, or business.