Today's Law As Amended

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SB-238 Worker status: factors for determination of employee status.(2019-2020)

As Amends the Law Today

 The Legislature finds and declares all of the following:
(a) On April 30, 2018, the California Supreme Court issued a landmark decision in Dynamex Operations W. v. Superior Court, (2018) 4 Cal.5th 903 by overturning 29 years of precedence established in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
(b) The decision replaces the multifactor test for determining employment status from the Borello case with the ABC test, a one-size-fits-all and far more restrictive test consisting of just three factors, of which all must be met in order for an individual to be classified as an independent contractor.
(c) The decision puts the livelihood of nearly 2,000,000 Californians who choose to work as independent contractors at risk.
(d) The decision eliminates the choice that more and more Californians are making for their work and quality of life.
(e) The decision moves the state backwards and does not accurately reflect today’s realities, including the changing demands of the modern workplace.
(f) Prior to this decision, the ABC test never existed in California law or regulation.
(g) Such a momentous policy change should not be made by judicial fiat; instead, it should be made by the Legislature.
(h) The federal Fair Labor Standards Act 1938 (FLSA) provides a good model for determining employment status, as it is flexible enough to reflect today’s realities and modern workplace demands while also protecting the rights of workers.
(i) Conforming California’s law for determining employment status to the FLSA will also simplify compliance for employers and workers who will no longer have to navigate two different sets of rules.
(j) It is the intent of the Legislature to conform California’s test for determining employment status for purposes of wage orders to the test established by the federal Fair Labor Standards Act.
(k) It is the intent of the Legislature that this test for determining employment status for purposes of wage orders shall be interpreted to apply in California as it is applied under the federal Fair Labor Standards Act, including an emphasis on the degree of control and the specification that no one factor controls, but rather the totality of the circumstances.
(l) It is also the intent of the Legislature that this test will be effective for all claims filed on and after April 30, 2018.

SEC. 2.

 Section 2750.2 is added to the Labor Code, to read:

 For purposes of the wage orders under the provisions of this code and the wage orders of the Industrial Welfare Commission, the determination of whether a person providing labor or services for remuneration is considered an employee shall be based upon an analysis of whether that person is economically dependent upon the hiring entity. This analysis shall be based upon the economic reality of the worker’s relationship with the hiring entity by considering only the following six factors:
(a) The nature and degree of control by the principal.
(b) The worker’s opportunities for profit and loss.
(c) The amount of the worker’s investment in facilities and equipment.
(d) The permanency of the relationship.
(e) The required skill necessary for success.
(f) The extent to which the services rendered are an integral part of the principal’s business.