Making sense of California law on contractors and gig workers
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Making sense of California law on contractors and gig workers

| Nov 26, 2020 | Firm News

The state of California occupies an unusual niche when it comes to the relationship between employers and contractors. With the recent passing of laws and an amendment on this matter, it can be difficult for workers to understand where they stand.

The November election also scrambled things up a bit as well.

The impact of the election

Forbes reported that the initiative measure known as Proposition 22 passed in California by a 58% margin. This vote changed some of the provisions of Assembly Bill 5 (which became law at the start of 2020), specifically that the law won’t apply to gig drivers. Workers for such companies as Lyft, Uber and DoorDash can keep the title of independent contractors.

Independent contractors do not receive certain protections under law. Gig workers in essence forfeit the following labor rights:

  • Minimum wage
  • Overtime protections
  • Unemployment insurance
  • Workers’ compensation

The measure did provide some protections for gig drivers. These included alternative benefits such as minimum compensation, healthcare subsidies, vehicle insurance and safety training.

The present state of most contractors

Even with the election results, large portions of AB5 and a following amendment which passed in September remain in place. Business Insider says the bill minimizes the amount of work freelancers can do for a company without becoming a full-time employee who receives by law employee benefits and protections. The bill’s purpose was to prevent employers from shortchanging employees the benefits they earned.

Once enacted, the law required employers to determine if workers were full-time employees by following an ABC test. To qualify as an independent contractor the worker must satisfy all three conditions of the test.