As Expected, Govenor Newsom Immediately Signed Assembly Bill 5 Which Now Affects Independent Contractor Classification

By: Huy M. Tran and Kerri N. Polizzi

The following is an update from our article last week. [http://www.kringandchung.com/blog/2019/09/california-legislature-passes-new-bill-affecting-independent-contractor-classification.shtml]

On September 16, 2019, Assembly Bill 5 (AB-5) was enrolled and placed on Governor Newsom's desk. As predicted, on September 18, 2019, Governor Newsom signed AB-5 in a private ceremony in his state Capitol office.

What's to Come for Employers and Employees

AB-5, which is intended to codify the recent California Supreme Court decision in Dynamex, will take effect on January 1, 2020 at 12:00 a.m.

Also known as the "Gig Worker Bill", AB-5 targeted companies known for creating the Gig Economy, such as Uber and Lyft. In general, this bill will also force many other employers to fall into compliance with the new Labor Code section 2750.3, which contains the Dynamex "ABC Test." Due to AB-5's retroactive application to "existing claims and actions," many currently employers are exposed to liability and face potential lawsuits for classification decisions made or continued as early as 2015.

Governmental agencies such as the Department of Labor Standards and Enforcement (commonly referred to as the Labor Commissioner), the Employment Development Department, and the Franchise Tax Board, have authority over various aspects of worker misclassification claims and audits. That said, AB-5 also empowers the state attorney general and city attorneys to file claims against employers for these violations.

While these employment law changes are imminent, there could be additional changes made when the Legislature reconvenes in 2020, as Governor Newsom indicated in his September 18, 2019, letter after signing AB-5.

What Should Employers and Employees Do

Kring & Chung, LLP is hybrid firm who represents employees and employers. For employees who believe that they are misclassified and owed overtime wages and meal and rest breaks, contact Associate Attorney Huy M. Tran. He can be reached at (949) 261-7700 or via email at htran@kringandchung.com. For employers who are interested in an evaluation for existing classifications and potential liabilities, contact Associate Attorney Kerri N. Polizzi. She can be reached at (949) 261-7700 or via email at kpolizzi@kringandchung.com

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