California employers, employees and attorneys will likely long remember New Year’s Day 2020 as marking major changes in the state’s labor laws. Wage and hour laws especially saw new rules passed in 2019, with none likely to have a bigger impact than Assembly Bill 5 (AB 5).
New laws expand the power of the Labor Commissioner, increase the state’s minimum wage and give employees new ways to seek penalties for wage violations. With new laws come new ways for people to misinterpret them and new lawsuits to file based on these readings.
The Dynamex decision and AB 5
Every Californian who pays attention to the news has probably heard about the Dynamex Operations West, Inc. v. Superior Court and lawmakers’ attempts to write its consequences into the law.
Among other effects, AB 5 assumes workers are employees unless they pass what is known as the ABC test for contractors, now in use in various forms in most other states.
Legal challenges to AB 5 already underway
A number of legal challenges to AB 5 were filed even before it went into effect, including one by groups that speak for press photographers and one led by the California Trucking Association (CTA).
The Economic Policy Institute, usually thought of as a liberal think tank, issued a 2015 report that said between 10% and 20% of employers incorrectly classify at least one worker as an independent contractor. It included trucking as a prime example of an industry with many such problems.
But the CTA argues that AB 5 should include trucking in the list of exempt trades, businesses and jobs, many of which will be subject to a different test. Such exemptions include professional service jobs such as certain insurance agents, health care professionals, investment advisers and real estate agents.