As of January 2020, California has implemented a new law that affects businesses that hire independent contractors. The law, known as AB5, makes it much harder for companies to classify workers as independent contractors rather than employees.
This law was created in response to concerns that many companies were misclassifying workers in order to avoid providing benefits like healthcare and paid time off. Under AB5, the criteria for determining whether a worker is an employee or an independent contractor are much stricter, making it much harder for companies to continue misclassifying workers.
The law has been controversial, with some arguing that it will hurt small businesses that rely on independent contractors to keep costs down. Others argue that the law is necessary to protect workers from being exploited by companies that take advantage of their status as independent contractors.
Under AB5, a worker is considered an employee if they meet three criteria:
1. They are under the control and direction of the company they work for
2. They perform work that is integral to the company`s core business
3. They do not have an independent business in the same field as the work they are doing for the company
If a worker meets these criteria, the company must classify them as an employee and provide all the benefits that come with that classification, such as healthcare, paid time off, and workers` compensation.
While the law may be challenging for some businesses to adapt to, it is an important step towards ensuring that workers are treated fairly and that companies are held accountable for their employment practices. If you are a contractor working in California, it is important to understand your rights and to speak with an attorney if you believe you are being misclassified by your employer. Ultimately, this law is a step in the right direction towards creating a more equitable and fair employment environment for all workers in California.