AB 5 UPDATE
Two major AB 5-related developments are taking shape as we go to press:
AB 2257, Assemblywoman Gonzalez’s AB 5 clean-up legislation, is up for a vote by the full Senate where it appears it will pass. It will have to go back to the Assembly for a concurrence vote and then must be signed by the Governor before it will actually become law; and
A San Francisco superior court has issued an injunction against Uber and Lyft requiring them to treat their drivers as employees under AB 5’s ABC test.
AB 2257
AB 2257 is a compromise bill negotiated with various industry leaders and Assemblywoman Gonzalez to try to address the unintended consequences of AB 5. According to Gonzalez, when AB 5 was enacted it was understood that clean-up legislation would be required to ensure that those workers who had historically been treated as independent contractors would not be adversely impacted.
At the time we went to press, AB 2257, which is still a work in progress, would make the following major changes:
Specifically exempt the following from the ABC test:
Various music and entertainment industry professionals;
Competition judges, including amateur umpires or referees;
Securities broker-dealers or investment advisors; and
Manufactured housing salespersons;
Eliminate the annual cap of 35 maximum pieces of content for the professional services exemption for photographers, photojournalists, and freelance writers, editors, and newspaper cartoonists and expand the exemption to include videographers, photo editors, copy editors, and illustrators;
Include appraisers in the professional services exemption;
Ease the business-to-business contracting exemption from the ABC test to allow the business service provider to be treated as an independent contractor when it performs services directly for the contracting business’s customers, as long as the service provider’s workers performing the services are employees and the service provider regularly contracts with other businesses;
Expand the referral agency exemption to exempt service providers from being treated as employees of the referral agency to apply to most industries, including youth sports coaching and certified interpreting and translating services, but specifically excluding janitorial, delivery, courier, transportation, trucking, agricultural labor, retail, logging, home care, or construction services other than minor home repair industries; and
Clarify the referral agency exemption to apply only in those instances when the service provider sets their own hours, rates, and terms of work (previously only hours), without deduction by the referral agency.
Remember that an exemption from the ABC test means that the Borello1 right-to-control test would apply for purposes of determining whether a worker is an independent contractor or an employee.
If enacted, AB 2257 would go into immediate effect.
Uber/Lyft litigation
California won the first round in its lawsuit seeking a preliminary injunction and damages against Uber and Lyft for misclassifying their drivers as independent contractors.2 A San Francisco superior court granted the state’s motion for a preliminary injunction requiring Uber and Lyft to treat their drivers as employees.
On August 20, a California court of appeal issued a temporary stay, allowing Uber and Lyft to continue treating their workers as independent contractors until:
The court rules on the issue on an expedited basis; and
The voters have had an opportunity to vote on Uber and Lyft’s ballot initiative (Proposition 22) on the November 2020 ballot.
We will keep you posted on these and related developments.
Keep your seat belts fastened for what is sure to be a bumpy ride ahead.