In last April’s landmark, unanimous California Supreme Court ruling in the Dynamex case, the court delivered one of the most pro-worker decisions in decades, enshrining a simple A-B-C test that employers must comply with to designate workers as “independent contractors.” The ruling was made necessary by the growing trend of corporations calling workers contractors just so they wouldn’t be on the hook to provide basic protections like unemployment insurance or workers’ compensation. This scheme has workers across many industries living on the edge and is costing taxpayers billions each year.
In response to the ruling, Assemblymember Lorena Gonzalez introduced AB 5, a bill that would codify this important decision into law and clarify it to provide certainty to employers and workers alike.
Here are 5 reasons the California legislature must say Yes on AB 5:
All workers deserve basic job protections
Imagine coming to work every day knowing that if you’re injured on the job or laid off, you will be denied the basic protections all other workers receive. That’s the reality for hundreds of thousands of workers in construction, trucking, health care, gig work and many other industries. Oh, and the boss doesn’t even have to pay you a minimum wage. These workers are treated as second class, not by choice, but because their employers illegally classify them as “independent contractors” even though there’s nothing independent about their jobs.
Taxpayers are on the hook when corporations cheat workers
When companies cheat workers out of basic protections, it hurts us all. The laid off worker with no unemployment insurance is forced to rely on government assistance to put food on the table in between jobs. The injured worker without workers’ comp or health insurance can’t see a family doctor – instead he or she goes to the ER. If you’re not earning a minimum wage, good luck supporting a family on your meager income, even if you have two or three side hustles. The bottom line: Worker misclassification costs the state $7 billion annually, a tab that taxpayers are forced to pay.
AB 5 provides certainty and clarity for workers and employers
As with any court decision, Dynamex didn’t answer every question in the complicated issue of determining employee status versus being designated an independent contractor. As a result, AB 5 provides an opportunity to clarify the decision so that there’s no uncertainty. By codifying the simple A-B-C test that employers must use to determine independent contractor status, AB 5 provides all businesses with an easy-to-comply-with test. The bill also makes clear that a number of professions are not covered under Dynamex or AB 5, such as emergency room doctors, insurance agents and financial advisors and others.
If you’re truly your own boss, AB 5 doesn’t apply
There’s always going to be a need for businesses to use legitimate independent contractors. And we also recognize that some workers like being their own boss. AB 5 respects these arrangements. What we can’t tolerate is working people who are performing the duties of an employee to be cheated out of a minimum wage, workers’ compensation, unemployment insurance, the right to form or a join a union and protection against discrimination.
The future of work starts now – workers need and deserve dignity and respect on the job
Many companies are building entire business models around cheating their workers. This trend is accelerating, threatening to erode the social contract and create more insecurity and instability in the future. AB 5 is a rare opportunity for California legislators to help shape the future of work while addressing terrible inequities that already exist. Giving working people dignity and respect on the job isn’t just necessary, it’s a moral imperative. By making AB 5 law, California can cement its position as the national leader on workers’ rights while offering much-needed relief to hundreds of thousands of workers living on the edge.