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AB 5 Explained - YouTube
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what is a B five a B five is a new
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California law effective January 1st
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2020
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its purpose is determining whether a
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worker may remain an independent
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contractor or must be an employee
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previously California used the burello
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test applying 11 flexible factors to
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answer one question who controlled the
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worker the worker themselves or the
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hiring person but in April 2018 Annu
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tests emerged from a California Supreme
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Court ruling called dynamics this ruling
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contained an ABC test that narrowed the
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decision to three rigid factors all of
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which must be passed a the worker is
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free from the control and direction of
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the hirer B the worker performs work
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that is outside the usual course of the
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hiring entity's business C the worker is
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engaged in an independently established
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trade occupation or business of the same
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nature as the work performed for the
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hiring entity the ABC test sent
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shockwaves through the business
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community why it severely limited the
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ability to be an independent contractor
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or to hire independent contractors many
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were worried about failing the ABC test
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the B factor the worker performs work
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that is outside the usual course of the
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hiring entity's business was most
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troubling under burello you could
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satisfy a majority of the conditions but
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under ABC you had to pass all of them
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this left many businesses questioning
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what would be considered a part of their
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usual course of business at first
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dynamics applied only to wage orders but
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a b 5 expanded the law to affect every
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worker because it now applied to non
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wage order labor code issues as well
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essentially that meant to all wage and
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hour laws as well as unemployment and
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workers compensation because a b 5 was
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problematic carve out exemptions were
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provided for some industries doctors
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lawyers manicurists even commercial
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fishermen all
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exemptions allowing them to remain under
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burello that preserved a bit more
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freedom in the choice of whether someone
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was properly classified as an
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independent contractor or employee
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however many others like Court Reporters
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captioners and interpreters were not
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exempt and now fell under the ABC test
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failing the ABC test may be dire for
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independent contractors forced to become
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employees they may lose freedom to set
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their own scheduled workflow or work
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locations they could be denied the right
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to work for multiple agencies or
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organizations higher costs to agencies
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may mean reduced hours and pay cuts
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there may be few employee benefits
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because small businesses cannot afford
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full-time employees no more state or IRS
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write-offs
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the increased costs forced restructuring
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or loss of flexibility may drive
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agencies out of business it could
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exacerbate a shortage of captioning and
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interpreting services for people with
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hearing loss with a B 5 California has
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potentially eliminated the possibility
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to use independent contractors whose
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work can even remotely be defined as in
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your usual course of business and that
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possibly goes for independent
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contractors who are formed as legal
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business entities LLC's and corporations
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so what can you do right now share this
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video and visit www.fawziacademy.com
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