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Bill that would define independent contractor advances

gig economy

A bill that would create a law stemming from a controversial California Supreme Court decision on the definition of an independent contractor advanced Wednesday with the state Assembly passing the legislation 59-15.

The bill stems from the 2018 decision in Dynamex Operations West Inc. v. Superior Court of Los Angeles County in which two individual delivery drivers who sued package-and-document delivery company Dynamex Operations West Inc., alleging that the company had misclassified its delivery drivers as independent contractors rather than employees, thus violating California wage and worker laws, according to documents.

A.B. 5, introduced May 24, “codifies” this decision “that presumes a worker is an employee unless a hiring entity satisfies a three-factor test,” and would affect those working in the gig economy, according to a legislative analysis.

According to the bill, the test includes: “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;” “The person performs work that is outside the usual course of the hiring entity's business;” and “The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

The bill exempts from the test certain insurance and real estate occupations, physicians, securities broker-dealers, direct salespersons, hair stylists and barbers, and those performing work under a contract for professional services, as specified,” according to the analysis.  

It has not been placed on the Senate calendar as of Thursday morning.




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