Attribution: Rafal Konieczny CC BY-SA
AB 5, which became effective January 1, 2020, was intended to broaden the number of workers in California considered to be employees rather than independent contractors. It provides that any worker who provides labor or services for pay is considered an employee rather than an independent contractor unless the hiring entity demonstrates that (A) the person is free from the control and direction of the hiring entity in connection with the performance of the work, (B) the person performs work that is outside the usual course of the hiring entity’s business, and (C) the person is customarily engaged in an independently established trade, occupation, or business. It exempted persons providing professional services under specified circumstances, including certain services provided by still photographers, photojournalists, freelance writers, editors, and newspaper cartoonists. After complaints from several groups that limits on those exemptions were unworkable, the law was amended to recast the existing exemptions, and to add some new ones.
AB 2257, signed by the governor on September 4, 2020 and effective immediately, also adds the following exemptions to AB 5: certain occupations in connection with creating, marketing, promoting, or distributing sound recordings or musical compositions; a musician or musical group for the purpose of a single-engagement live performance event; individual performance artists presenting material that is their original work and creative in character and the result of which depends primarily on the individual’s invention, imagination, or talent; fine artists; people who provide underwriting inspections and other services for the insurance industry; a manufactured housing salesperson; people engaged by an international exchange visitor program; consulting services, animal services, and competition judges with specialized skills; licensed landscape architects; specialized performers teaching master classes; registered professional foresters; real estate appraisers and home inspectors; and feedback aggregators.
The existing law remains under attack on three fronts:
- Uber and Lyft, and several other app-based technology companies are promoting Proposition 22, which would provide that app-based drivers are considered independent contractors so long as the company providing the app service meets certain conditions, including guaranteed pay of 120 percent of minimum wage, per mile reimbursement for use of their vehicles, a healthcare subsidy, and an appeal process before terminating drivers from the service. The initiative is on the ballot for the November 3, 2020, general election.
- Uber and Postmates challenged the constitutionality of AB 5 in federal court in Los Angeles. Judge Dolly Gee denied their motion for a preliminary injunction on February 10, 2020. The companies have appealed that denial to the Ninth Circuit under Case No. 20-55267. It will likely hear argument on the appeal before the end of the year.
- The companies are fighting a lawsuit by the California Attorney General Xavier Becerra that would require them to comply with AB 5. On August 10, 2020, San Francisco Superior Court Judge Ethan Schulman granted a preliminary injunction requiring them to comply. The companies appealed to the First District Court of Appeal, which issued a stay of the preliminary injunction and set argument on the appeal for October 13, 2020, under Case No. A160701.
