Apr 11, 2019      News      

More gig workers seek exemption from ‘ABC’ law classifying them as employees

Self-employed workers and business owners are urging California lawmakers to expand a bill, allowing more gig workers to be exempted from employee status.

In a gathering early Thursday at the North Orange County Chamber of Commerce, representatives from both groups said they are seeking to include additional exemptions in Assembly Bill 5 — a move that would allow more independent contractors to retain their job flexibility.

Authored by Assemblywoman Lorena Gonzalez, D-San Diego, the bill exempts doctors, insurance agents, securities brokers and direct sellers (Mary Kay, Amway, etc.) from adhering to a 2018 California Supreme Court ruling that redefines what an independent contractor is.

The ‘ABC’ criteria

Under the court’s “ABC” criteria, a person or business is considered an independent contractor only if (A) they are free from the control and direction of an employer; (B) the work they perform falls outside the employer’s core business; (C) they have their own independent business or trade beyond the job for which they were hired.

AB 5 cleared its first major hurdle last week when the Assembly Committee on Labor and Employment approved the measure, 5-0.

Those seeking an expansion of the legislation want a variety of other workers exempted, including architects, engineers, lawyers, real estate agents, therapists, accountants, barbers, hair stylists and others who have advanced degrees, are licensed by the state or simply want to remain independent contractors.

When contacted Thursday, Gonzalez’ office said discussions regarding AB 5 are ongoing.

Nearly 2 million Californians are self-employed

California is estimated to have nearly 2 million residents who choose to work as independent contractors, according to the U.S. Bureau of Labor Statistics, and that doesn’t count people who supplement their income through online work.

It’s all about flexibility, according to Mariana Bellis, who works as a mobile hair stylist through an app-based company called Glamsquad. The service allows customers to request an on-site appointment wherever they are.

That changed when she began work as an independent contractor with Glamsquad.

“I’ve been doing this for about two years and I enjoy it a lot more,” she said. “I can work one day and then take the next couple days off if I want and I’m not tied to specific clients.”

Mohamma Azam, an independent driver for California Yellow Cab, feels the same way.

“I can choose what hours I want to work,” the 47-year-old Anaheim resident said. “My wife doesn’t know how to drive, so I have to take my son to school and pick him up later in the day to take him home. I like not having a boss telling me what to do and what time I have to be at work.”

The ABC rules take away the flexibility independent contractors value so highly, and many say their income will take a hit. A 2017 Department of Labor survey found 79.1 percent of independent contractors preferred their current situation, while only 8.8 percent said they would rather have a traditional work arrangement.

Businesses saddled with more costs

The change also affects businesses. Employers that previously classified their workers as independent now have to cover medical benefits, workers compensation, payroll taxes and other costs for more employees.

The recent California Supreme Court ruling dates back to 2004 when Dynamex, a package and documents delivery company, converted its drivers to independent contractors in a move to save money.

A few months later, a group of drivers sued, claiming they performed the same basic tasks in the same manner as when they were employees but without the protections of the California labor code and wage orders, which regulate wages, hours and working conditions.

In April 2018, the court ruled in favor of the drivers. But it based its decision on the newly created ABC standards that had never been used in the state.

“I think AB 5 needs to be expanded to include a broader group of contractors,” said Theresa Harvey, president and CEO of the North Orange County Chamber of Commerce. “The gig economy benefits our overall economy in general.”

Harvey cited Uber Eats as an example. The online platform allows customers to order food from any restaurant and have it delivered to their door by an Uber driver. Restaurants benefit, she said, because it gives them a whole new source of revenue.

Read more from the Los Angeles Daily News here.