I write this as California Assembly Bill 5 sits on Governor Newsom’s desk. It is more than likely he will pass this measure which clarifies and codifies the California Supreme Court Decision Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903. (Dynamex). In Dynamex the court adopted a three part ABC independent contractor test, which include the requirement that to be an independent contractor a person must perform work that is outside the usual course of the hiring entity’s business.

This decision has been particularly problematic for industries that have traditionally used professional contractors, such an insurance, real estate, medicine, law, engineering, accountancy and other licensed occupations that realistically cannot function without a pool of highly skilled independent contractors. These professions were all part of the “gig” economy long before there was even the notion that such a thing existed.

Thankfully there are carve outs under the law as it currently stands here: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5

As to those industries that do not benefit from the carve outs, unfortunately Dynamex is now clearly the law, and extreme caution will need to used by companies or they risk a misclassification action. If you want to speak to me about your specific situation and how we might attempt to mitigate your risks please give me a call 415-531-5654 or send me an email at martin@sanceslaw.com.

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