- Category: Labor
The passage of AB5 will arguably, shape the future of labor in California and the Nation. Even with the amendments passed by the legislature, and with the Uber Proposition 22 which passed further carving out exemptions for selected classes of businesses, the next decade to be a tumultuous and uncertain time for business owners, and even some workers.
I know how it feels to be sure of your cause and case and then how it feels to be kicked in the gut by a reality that it's not IF I was going to pay in a wage theft and misclassification lawsuit, but rather, HOW MUCH? Guilt or exoneration mattered in the letter of the law, but not in the spirit of it's intent, which was to provide workers with competitive pay and benefits while not giving "cheaters" a competitive business advantage over those that comply with the law and "pay their fair share". Even if you're paying your workers more as independent contractor, all of that becomes irrelevant when the authorities come knocking so to speak.
The conflicting truth is: Not all workers want to be employees and some businesses provide better pay than their counterparts paying an hourly rate, as well as, not all workers are exploited nor are all owners using independent contractors, nefarious criminals.
There are many instances where a worker benefits more by the flexible nature of the independent contractor relationship and also earns more based upon a desired output productivity and not based upon the time spent on the clock.
But once a judicial ruling like Dynamex becomes codified into the statutes of the state constitution, the analogy looks a little like this: the light you see at the end of the tunnel ... isn't the end, it's an oncoming freight train and you will either be in front of it or on it.
I can share with you my experiences being on the receiving end of the law, but I cannot offer you legal advice. Only an attorney can offer legal advice and my insight in no way is meant to be provided or received as such. I've spent plenty of money over the years for good legal advice for my businesses in order to navigate the litigious minefield of California business and labor operations.
Additionally, I've been through an IRS audit and a liability insurance audit for my independent contractors, in addition to a wage theft and misclassification suit mentioned earlier, and had found ways to comply with the law prior to AB5, both working with employees and independent contractors.
Over the years, another local business owner and friend has passed regular inspections of his books by the EDD to operate with an independent contractor and employees. That's all a thing of the past ...now all of his workers are employees (and earning less due to the financial encumbrances added by the AB5 legislation.
Most business cannot pass part B of the ABC Test and must, therefore, convert to employees, find a legal exemption or cease operations if they do not want to run afoul of the State authorities. You don't want to be in violation of this law.