What is Dynamex?
In the Dynamex CA Supreme Court case, the Court ruled unanimously that companies must use a simple test, already adopted by other states, to determine if a worker is truly an independent contractor instead of an employee. The ruling removes uncertainty for businesses and ensures that companies aren’t cheating workers out of basic protections like a minimum wage, unemployment insurance and workers’ compensation that they deserve as employees.
What is AB 5?
Worker advocates have joined with Assemblymember Lorena Gonzalez Fletcher to enshrine the Dynamex ruling into state law and close loopholes that allow some big corporations to continue cheating. The bill, AB 5, clarifies the decision and protects both employees and those who are actually independent contractors.
Why is AB 5 needed?
By enshrining the Dynamex decision in state law, we can create one clear definition of employment that is easy to understand and follow.
In addition, this bill will clarify what employment relationships are not covered by the decision, providing certainty to industries that are unsure of the case’s implications.
The reality is that most businesses do not misclassify workers and have been forced to compete with this illegal model. With the Dynamex decision and the clarity from AB 5, we can level the playing field for companies that follow the law and raise standards for millions of California workers.
If someone wants to be an independent contractor, shouldn’t they have that choice?
Anyone who wants to go into business for themselves as an independent contractor will continue to have that choice. This bill in no way limits legitimate independent contractors. There’s always going to be a place in our economy for those who want to be their own boss and contract their services to businesses that follow the law. What we need to stop is the practice of some unscrupulous employers calling employees “independent” just so they can cut corners on costs. When businesses flout the law with these schemes, we all pay the price. Good businesses struggle to compete. Workers are cheated out of pay and basic protections and our state loses billions in revenue that supports our schools, public safety and roads. That’s why Dynamex and AB 5 are so important.