The Valley Industry Association’s Advocacy Committee has been in hot pursuit following the changes, amendments and carve-outs of Assembly Bill 5, which passed the California Assembly floor on May 29, and the Senate’s Labor, Public Employment and Retirement Committee on July 10.

Next stop in AB 5’s journey will be the Senate Appropriations Hearing on Aug. 12, the legislature’s first day back from summer recess.

AB 5 Worker status: employees and independent contractors, also known as the gig-work bill, has the potential for catastrophic outcomes for both industries and workers if not enough foresight is anticipated before the final vote.

Existing law, as established in the case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles in 2018, creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits.

Authored by Assemblywoman Lorena Gonzalez, D-San Diego, Assembly Bill 5 seeks to codify the controversial decision that makes it harder for companies to claim workers as independent contractors. As the ruling currently stands, the hiring business is required to perform a three-part test — known as the “ABC” test — to establish whether a worker is an independent contractor or an employee. Businesses that rely upon freelancers and independent contractors are heavily impacted, as are workers who prefer the gig economy of flexibility and independence.

Supporters say companies misclassify workers as independent contractors to sidestep employment laws that address minimum wage, overtime, workers’ compensation, disability and other benefits. As a side note, these costs are estimated to add up to an additional 30% to companies’ labor costs.

Opponents say the legislation would devastate many businesses and hurt workers who prefer autonomy and independence in their work along with the flexibility of setting their own schedules.

While Uber and Lyft with their on-demand workforce may be the lightning rod for the legislation, many other businesses are swept up in the regulations.

The Dynamex decision may be an example of judicial overreach, but the reality is that businesses and workers across the spectrum are looking to the legislature to pass into law a new model that everyone can work with to keep the gig economy flowing and business moving forward.

VIA knows industry sectors are feverishly pitching and negotiating in Sacramento to let them keep workers as independent contractors. Referred to as carve-outs, professions primarily ones where practitioners set their own rates, have successfully added draft language to exclude them from the wide net of the proposed legislation.

The list of Assembly Bill 5 exemptions is growing. This month Gonzalez added construction contractors, business-to-business services, freelance writers, fine artists, grant writers, graphic designers and podiatrists to that list. The carve-outs also include doctors, dentists, lawyers, architects, accountants, engineers, insurance agents, investment advisers, direct sellers, real estate agents, hairstylists, barbers, estheticians and electrologists, according to the San Francisco Chronicle.

If there are other professions to be considered, our California legislators want to hear from you, preferably before the Aug. 12 hearing.

If you are interested in this issue or have any other concern about what’s happening in Sacramento, join VIA for the second annual “State of the State” review at its monthly business luncheon on Tuesday, July 23, 2019 at 11:45 a.m. at the Hyatt Regency Valencia, 24500 Town Center Drive in Valencia. The Honorable Scott Wilk, State Senator for the 21st Senate District, and The Honorable Christy Smith, Assemblywoman for the 38th Assembly District, will update attendees on legislative actions, status, and outcomes happening in our state’s capitol.

The event is nearing sell-out capacity. Reservations are required. Tickets available at www.VIA.org/calendar or by calling 661-294-8088. For more information, contact the VIA office at admin@via.org.

About the Valley Industry Association (VIA)
The Valley Industry Association of Santa Clarita represents business interests throughout the Santa Clarita Valley. VIA provides its members – industrial, commercial and service companies – the opportunity to collaborate on a broad range of business issues. In addition to being a legislative advocate, VIA serves as a one-stop-shop for relevant business information, supports local educational initiatives, professional development, and provides networking opportunities. Visit www.VIA.org for more information.