California Prop 22 – Not Just A One State Issue
California Prop 22 was overwhelmingly given a thumbs up by the Golden State’s Voters.
If you are saying, yes, but I do not live in California, check out the last heading in this article – worth your time.
For many years, California had moved towards defining independent contractors as employees.
California Assembly Bill 5 (AB 5) was passed in 2019. The effects on the independent contractor vs. employee debate were chilling. The Dynamex Supreme Court decision was the basis for AB 5.
AB 5 enumerated each industry where the workers should be considered employees. The Dynamex Decision was very vague as to the exact companies that should not allow the independent contractor classifications.
From truckers to independent press contractors – AB 5 changed the rules of having independent contractors working for your firm.
For instance, many independent writers of worker’s comp articles seemed to disappear overnight. Due to privacy, I will not mention them by name.
When I traveled to what I thought was going to be an all-day WCIRB Conference earlier this year, I even asked the question to the presenter after they presented on the Class Code changes involved with AB 5
There are at least three Assembly Bills pending that contradict AB 5 – what effect will that have on how the WCIRB views any Class Code changes or premium audits that involve independent contractors? The WCIRB told me that they would have to get back to me. Fair enough.
According to the Ballotpedia (Updated 10:30 AM Eastern Time today), 58.4% of California voters checked Yes on their ballots. By the way, if you have not visited Ballotpedia, it is worth a look.
The Beginning of AB 5 – Dynamex Decision
The Dynamex Decision provided the three tests to see if a California worker was an employee or an independent contractor – they are-
The worker is:
- Free from the hiring company’s control and direction in the performance of work
- Doing work that is outside the company’s usual course of business; and
- Engaged in an established trade, occupation, or business of the same nature as the work performed
After the Dynamex decision, many employers contacted J&L/me on premium audit and policy confusion. Their basic question was – How do we tell if the workers working for us are contractors or employees?
What California Prop 22 Does Not Do
California Prop 22 does not define any other employees/contractors beyond independent drivers such as Uber, Lyft, and Doordash.
Earlier I mentioned reporters and other types of workers – these workers are still under AB 5/Dynamex presently. Prop 22 covered a very defined section of independent contractors.
More workers may be added to the independent contractor list in the future.
What California Prop 22 Means For Companies Not in CA
One of my catchphrases is – what happens in California will be coming to a state near you. The Golden State always seems to make rules and regulations that are often adopted by other states in some form. Massachusetts and Tennessee even used some of AB 5’s wording in introduced legislation.
Bottom line – make sure your independent contractor contract spells out everything in great detail. Do not use a boilerplate contract. A different version of AB 5 or California Prop 22 may show up in your state – be prepared.
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