Northern California Record

Wednesday, January 22, 2020

NFIB vows to fight California bill defining independent contractors


By Rich Peters | Jul 19, 2019

Legislativesession 1280

SACRAMENTO – A Sacramento-based attorney with the National Federation of Independent Business (NFIB) recently discussed some of the association's priorities for the upcoming legislative season in California.

Luke Wake, staff attorney with NFIB, specifically mentioned Assembly Bill 5 that reached the Senate floor, saying NFIB will push back against the bill in the best interests of small businesses and business owners in the Golden State.

The bill would require that an "ABC" test be applied in determining the status of a worker as an employee or independent contractor for all provisions of the Labor Code and the Unemployment Insurance Code, unless another definition or specification of “employee” is provided.

According to a 2018 California Supreme Court ruling, a worker can only be an independent contractor if each of these three factors of the "ABC" test are met:

A. 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.

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 of the same nature as the work performed.

The bill also sets to expand the categories that individuals would be eligible to receive benefits from.

“We don’t believe that it provides broad enough relief,”  Wake said. “It provides special carve outs for select industries to basically allow them to operate under the old rules.”

“We don’t think it’s right to give a carve out to select industries. We think that if someone is holding themselves out of being in business and they intend to operate as an independent business, say for example if they’ve gone through the steps of incorporating or having an LLC, if they think they’re an independent business then they should operate under the old standards. So we’re looking for a business-to-business exception from this ABC test.

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