California Assembly BIll 5 Article Response Gig Employers Very Concerned

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California Assembly Bill 5 Cranks Up the Questions – Email and Phone Calls 

The California Assembly Bill 5 (also known as AB 5) article published by me this week generated the most phone calls and emails on an article in months.   

Map of California Assembly Bill 5 Interstate
Public Domain License – User:NE2

J&L heard in the last 48 hours from a:

  • Dog walking company
  • Stonecutter
  • Trucking line 
  • Attorney 
  • Associated consultant
  • Insurance agency
  • Temporary employer
  • Reporter 
  • Researcher  
  • Medical clinic
  • Other employers 

Some of the forward-thinking employers and entrepreneurs were not directly affected by California Assembly Bill 5.   Their companies were located in other states.   Their concern originated with my statement 10 years ago that I included in the recent article.  <<<Check out that article here

The statement – what happens in California may be coming to a state near you – raised many questions within the general employer community on who was an independent contractor and who is an employee.   

The IRS website names even more categories of employees or contractors.   I use the website as my go-to starting point for employers.   Check out the IRS determinations here.   Yes, I know that many states have exceptions.  I use the website as a rule-of-thumb only. 

The IRS categorizes workers as: 

  • An independent contractor
  • An employee (common-law employee)
  • A statutory employee
  • A statutory nonemployee
  • A government worker

If you had thought only two employee categories of workers exist, you might want to check out the definitions of each type.   I will be updating my IRS subcontractor page analysis next week with a new article.  The IRS always provides a plethora of information on taxes on their website. 

Certificates of Insurance become very valuable at the time of the premium audit.  Make sure that the premium auditor sees any certificates of insurance.  More proof of the type of relationship exists, but if you have the certificates, attach them to your organized spreadsheets to lower your workers’ comp audit stress level.  

Wait, do you organize your employees and contractors on a spreadsheet for the premium audit?  If not, an employer should immediately start that project when the notice of premium audit letter arrives with a proposed date of audit.   

Organization and neatness count tremendously during any audit (premium, tax, unemployment, etc.).   Excel(r) can be your best friend.  

Dynamex Decision

Work at California Assembly Bill 5 over the phone
Wikimedia Commons – Daviesmo

The California Assembly Bill 5 was a codification of the Dynamex court decision that added in one major concern that had previously  not been considered: 

Is the worker an integral part of your business?    Google defines the word integral as:

  • necessary to make a whole complete; essential or fundamental.

You may want to refer to the actual decision using this Dynamex court decision link.   This court decision became the basis for California Assembly Bill 5. 

The chain of events was:

  • Dynamex decision 
  • AB 5 produced 
  • AB 5 passed 
  • Governor signed into law 
  • Law became effective January 1, 2020 
  • Gig-based companies are ignoring the law 
  • Trucking companies filed for an injunction against AB 5
  • Large gig-based companies pledging $100 million to repeal the law 

Please remember we/I are not attorneys or agents, so you may wish to consult with your agent and attorney on your compliance with California Assembly Bill 5.

 

©J&L Risk Management Inc Copyright Notice

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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