On July 10, 2019, the California Senate Labor Committee voted in favor of Assembly Bill (AB 5). As we previously reported (see HERE), AB 5 would make it harder for companies to rely on independent contractors because it presumes a worker is an employee unless a hiring entity passes a difficult three-part test. Supporters of the bill celebrated at the State Capitol, while opponents remain concerned that the bill will devastate businesses that rely on independent contractors.
Despite the Senate Committee vote, AB 5 still has a way to go before becoming law. The bill needs to clear the Senate Appropriations committee and full Senate vote. While the bill exempts several professions from coverage, the Senate might include additional carve outs before the bill is put in final form and sent to the Governor. The bill currently exempts direct sellers, doctors, certain hairstylists and barbers who rent booths at salons or provide natural hair braiding, human-resources professionals with advanced degrees, insurance agents, investment advisers, marketers, real estate agents, certain health care professionals, certain beauty professionals, certain subcontractors in the construction industry, certain repossession agencies, and certain service providers. In the meantime, companies that rely on independent contractors should evaluate whether AB 5 would exempt their profession, and if not, whether they will need to adapt their practices under the ABC test.
Please contact your Baker McKenzie lawyer for more details.