Breaking News: Federal Court Upholds California Law Defining Employees vs. Independent Contractors
The Ninth Circuit Court of Appeals has recently upheld California’s AB5, the landmark legislation which redefined how courts determine whether workers are independent contractors or employees. This decision has significant implications for employers across the state.
Overview of AB5: AB5, enacted in 2020, changed the law as to how workers would be classified as contractors or employees. While courts previously considered a number of factors to answer that question, AB5 presumed that all workers were employees unless the relationship met a strict test, called the “ABC” test:
- Autonomy: The worker is free from the control and direction of the hiring entity in performing the work
- Scope of Work: The worker performs tasks outside the usual course of the hiring entity’s business.
- Independent Trade: The worker is engaged in an independently established trade, occupation, or business similar to the work performed.
Workers must meet all three criteria to be classified as independent contractors. This shift has resulted in many previously considered independent contractors now being classified as employees.
The Recent Court Decision: AB5 has undergone a number of court challenges which have upheld the legality of the new law. At issue before the Ninth Circuit was whether the law could exempt certain professions from its requirements. By ruling that the Legislature could do so without violating constitutional principles, certain professions, such as lawyers, veterinarians, real estate agents, and hair stylists, keep their exemption and are not subject to the “ABC” test. The potential for an appeal to the U.S. Supreme Court remains uncertain, but it appears AB5 has survived the latest court challenge.
How We Can Help: Determining worker classification has always been complex and has broad implications on such issues as worker’s compensation, overtime, and meal/rest breaks. AB5 has made the issue more complex and difficult for employers. Understanding and complying with these changes is crucial for avoiding legal pitfalls. RPNA’s experienced attorneys are well-equipped to guide you through the complexities of worker classification and other employment matters. We can help you navigate the legal landscape to ensure compliance and address any questions you may have.
Contact Us Today:
• Michael B. Adreani: 📩 mba@rpnalaw.com
• Vincent S. Gannuscio: 📩 vsg@rpnalaw.com
• Trevor R. Witt: 📩 trw@rpnalaw.com
• Phone: 📞 818-992-9999
Stay informed and compliant with RPNA. We’re here to assist you with all your employment law needs.
