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2019 top stories: Signing of California's AB 5 law on independent contractors mobilizes industry opposition

Top business stories of 2019

Read 10 local stories affecting the economy of the San Francisco North Bay area this year.

Perhaps no other combination of letters and numerals has riled employers and workers alike in 2019 than Assembly Bill 5.

AB 5 was signed into law in September by Gov. Gavin Newsom. It reclassifies thousands of workers in California as employees who were previously considered contractors and therefore not entitled to full benefits.

Technology and ridesharing companies like Uber, Lyft and DoorDash in particular have vowed not to comply with the law, which takes effect Jan. 1, 2020, even committing to spending $90 million on a 2020 ballot measure opposing it according to the Associated Press. Uber also said it will keep treating its drivers as independent contractors not entitled to full time benefits and will go to court if need be.

The battle over who is an employee or a contractor in California goes back to last year, when the California Supreme Court issued a landmark decision establishing a three-part test to determine if workers are employees or contractors.

The law codified that decision, which found that workers can only be classified as independent contractors not entitled to benefits or covered by insurance if all three of the following criteria are met:

A: The worker is 'free from the control and direction' of the company that hired them while they perform their work.

B: The worker is performing work that falls 'outside the hiring entity's usual course or type of business.'

C: The worker has their own independent business or trade beyond the job for which they were hired.

If a worker does not satisfy all three steps, they would be considered employees and treated as such under the law.

While the law's author, Democratic Assemblywoman Lorena Gonzalez of San Diego, has ballyhooed its passage as a victory for working people in the state, many industries do not want to be tethered to a single employer.

The legislative process of bringing the bill to Newsom's desk saw carve-outs created for industries that protested being forcibly reclassified and who said they valued and needed their autonomy as contractors to stay in business.

The California Trucking Association last month filed a federal lawsuit in San Diego against the law and later followed up with a filing for an injunction to block AB 5 implementation. The University of California, Berkeley, Labor Center estimated that the law will apply to nearly two-thirds of independent contractors, including taxi drivers, janitors, retail workers and grounds maintenance workers, according to the Associated Press.

Categories specifically exempted under the law make up another 9%, mostly high-wage jobs including doctors and dentists, lawyers, accountants and real estate agents, Berkeley found.

Top business stories of 2019

Read 10 local stories affecting the economy of the San Francisco North Bay area this year.

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