California Governor Gavin Newsom is expected to sign into a law a far-reaching landmark bill requiring California companies (and those doing business in the state) to designate freelancers or independent contractors as employees. The legislation seeks to extend labor protections and employee benefits like health care, overtime, and minimum wage to many workers formerly considered contractors. If and when signed, the measure would go into effect January 1, 2020.
The legislation is intended to codify a 2018 CA state Supreme Court ruling that said contract workers were entitled to the benefits of regular employees. The court decision created the “ABC” test to help classify workers in California. The test is far stricter than federal regulations for determining employment status. It states that a worker can only be considered an independent contractor if they are: free from the “control and direction” of the company they work for; performing work that is “outside the course” of the company’s usual business; and have their own independently established trade, occupation or business.
Fortunately, for many CIRT members the bill explicitly exempts some occupations, including: doctors, dentists, lawyers, engineers, accountants, architects and realtors. HOWEVER, it appears to be silent as to “construction” and construction related employment situations which often may rely on independent contractors to deliver projects. To determine whether or not these arrangements are affected, the “ABC” test for determining employment status in California will have to be applied.