06 Jan New Independent Contractor Law
California’s new independent contractor law went into effect on January 1, 2020. The law, commonly referred to as AB 5, would make it harder for employers to treat workers as independent contractors. It’s too early to know exactly what effects the new law will have, but it will likely reshape the gig economy, which relies heavily on independent contractors.
Effects of the new independent contractor law
The practical effect of the new law is the reclassification of many independent contractors as employees. The new law changes the test used to determine whether someone is an employee or independent contractor. As of January 1, 2020, the law emphasizes the level of control that employers exert over the worker. And it focuses more on whether the worker’s job is part of the employer’s core business. In theory, this should require companies like Uber and Lyft to treat their drivers as employees. But it’s unclear exactly what this will look like in practice.
There is already legal controversy about the new law
Even prior to it going into effect, Uber said it didn’t intend to comply with AB 5. Uber and Postmates have already filed a lawsuit, claiming AB 5 is unconstitutional. More employers will likely file similar lawsuits.
Furthermore, misclassified employees will likely start bringing lawsuits of their own. There are advantages to being an employee and misclassified employees can recover penalties from employers. So employers who refuse to comply with the new rules may find themselves defending lawsuits filed by misclassified independent contractors.
If you believe your employer has misclassified you, contact the Khadder Law Firm today for a free initial consultation.