On Friday, September 18, 2019, the biggest change in employment law in many decades across the country was signed into law by Gov. Gavin Newsom. With nary a sound in the major news outlets, this law is poised to up-end the job classifications for tens of thousands of average Californians. At the last minute, fifty industries were given sweeping exemptions, demonstrating who still wields real power in Sacramento in this Democratic super-supermajority legislature.
The key to the new law is the third prong of the new three-part test: Is the employee working in the same field as their employer? For example, many lawyers work as “contract” lawyers for law firms, giving them flexibility but also lower salaries. Likewise, some doctors work on contracts the same way. Construction outfits also hire contractors — but plumbing companies cannot hire plumbers on
So of course, some of the people who can still use the contract employee, law firms, accountancies, doctors, are no surprise. Others, such as strippers, Rabbis and fishermen seem odd but won’t impact too many Californians.
One industry group that can still hire “contractors” is a big big surprise — building construction firms are exempt. More and more construction firms are using laborers as contract employees, pushing down workers compensation liablities to the lowest common denominator and the persons who can afford it the least.
Sadly, the court in Dynamex was hailed as providing a simple, three-step test to clarify and strengthen workers’ rights. This new bill remains full of gaps, loopholes and weaknesses. Both sides will claim victory, and the big “gig economy” players have been promised that “we’ll still consider a carve out for you also.”
For federal cases and the majority of the country, the twenty-party IRS test still remains — but with 50 carve-outs and new vague language, how much has really changed remains to be seen? Some people may see massive changes, corporate restructuring, new hires and job reclassifications. Some people may have to sue to get the Dynamex test applied to them. Uber and Lyft have been promised continued potential carve-outs. So while everyone in Sacramento pats themselves on the back, AB 5 is certain to do one thing: create decades of litigation over the same old same old: are you a contractor or an employee?