Today's Law As Amended

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SB-806 Worker status: employees: independent contractors.(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 (Dynamex) by overturning 29 years of precedent established in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
(b) The decision created a new, one-size-fits-all and far more restrictive ABC 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) Prior to this decision, the ABC test never existed in California statute or regulation.
(d) Such a momentous policy change should not be made by judicial fiat; instead, it should be made by the Legislature.
(e) Accordingly, the Legislature acted by passing Assembly Bill 5 (Chapter 296 of the Statutes of 2019), thereby codifying the Dynamex decision, as well as 57 carveouts for various industries, professions, and businesses.
(f) With the exception of independent contractor relationships within the various industries, professions, and businesses that received a carveout in Assembly Bill 5, most freelancers no longer have the freedom to work as independent contractors.
(g) Codifying the Dynamex decision with carveouts for some industries, professions, and businesses was not the only option available to the Legislature. The Legislature could have acted to protect the livelihood of the millions of Californians who choose to work as independent contractors and whose livelihoods were put at risk by the Dynamex decision.
(h) Assembly Bill 5 represents a lost opportunity for independent contractors and other freelancers by eliminating the choice that more and more Californians are making for their work and quality of life.
(i) The Dynamex decision and Assembly Bill 5 do not accurately reflect today’s economic and worklife balance realities, including the changing demands of the modern workplace.
(j) Of the 22 states that utilize an ABC test, only California and Massachusetts apply the ABC factors in such a narrow and inflexible way, and only 7 apply these factors for wage and hour purposes, while all others apply an ABC test for unemployment insurance purposes only.
(k) Economic freedom is foundational to the American way of life, and the Dynamex decision and Assembly Bill 5 delivered a destructive blow to this foundation.
(l) The right to earn a living is a natural right reserved to the people, and the Dynamex decision and Assembly Bill 5 undermine this natural right.
(m) According to numbers provided by the Legislative Analyst’s Office, Assembly Bill 5 threatens the livelihoods of roughly one million independent contractors who will no longer be able to work as freelancers.
(n) It is intent of the Legislature that Senate Bill 806 overturn the Dynamex decision and repeal and replace Assembly Bill 5 with a broad, flexible and workable test for determining independent contractor status.
(o) It is also the intent of the Legislature that the new ABC test in Senate Bill 806 provide maximum flexibility in allowing for independent contractor relationships in order to ensure that all those industries, businesses, and professions that legally and appropriately enjoyed independent contracting relationships prior to the Dynamex decision and Assembly Bill 5 can continue to do so now and in the future.
(p) It is also the intent of the Legislature that, for any industry, profession, or business that had legally and appropriately enjoyed independent contractor relationships prior to the Dynamex decision and Assembly Bill 5, but that may struggle to meet the new ABC test in Senate Bill 806, subsequent legislation to amend Senate Bill 806 shall be enacted to ensure that others can continue to enjoy independent contracting relationships.

SEC. 2.

 Section 2750.3 of the Labor Code is repealed.

SEC. 3.

 Section 2750.3 is added to the Labor Code, to read:

 (a) For purposes of this division, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor, unless the hiring entity demonstrates that the person meets both the requirement of paragraph (1) and the requirement of either paragraph (2) or (3):
(1) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. For purposes of this paragraph, a preponderance of factors, with no single factor of control being determinative, shall determine whether a worker is free from the direct control of the hiring entity.
(2) The person performs work that is either outside the usual course of the hiring entity’s business, or that the work performed is outside the place of business of the hiring entity, or the worker is responsible for the costs of the place of the business where the work is performed.
(3) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
(b) Subdivision (a) shall apply to all pending claims, whether in civil court or as an administrative action, filed on or after January 1, 2018, that relate to the classification of workers in this state.
SEC. 4.
 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
Due to the unprecedented disruption of the economy because of the COVID-19 virus outbreak, it is necessary that this measure take effect immediately.