Please ensure Javascript is enabled for purposes of website accessibility
It’s Time to Review AB 5 If Policymakers Really Want to Restart California’s Economy
gvw_calmatters
By CalMatters
Published 5 years ago on
May 2, 2020

Share

“Bring Back Borello!” will never work as a rallying cry, but it might be a timely agenda item for California legislators to seriously consider when the coronavirus coast is clear for them to return to Sacramento.

In the meantime, the April 30 second anniversary of the state Supreme Court’s Dynamex decision and the Assembly Bill 5 it subsequently unleashed should be reviewed with all due dispatch if policymakers are sincerely committed to restarting the state’s economy.

Opinion

John Kabateck
Special to CALmatters

As with anything, a few bad actors can ruin it for everyone. If I run a business and can classify all my employees as independent contractors, even though I treat them like employees by directing their work, I can save a bundle on state and federal taxes and on things like unemployment insurance and workers’ compensation premiums. The independent contractor is responsible for all that.

For nearly 30 years, California used the Borello test, named after the S.G. Borello & Sons, Inc. v. Department of Industrial Relations court case, for classifying employees and independent contractors — and it worked well. “Prior to Dynamex,” wrote Timothy T. Kim, a labor and employment attorney, “many cases (including the court’s own recent decisions) referred to the multi-factor Borello test as the traditional ‘common law’ classification analysis.”

So, what happened?

In the Dynamex Operations West, Inc. v. Superior Court of Los Angeles case, the state Supreme Court, noting the rise of independent contractors and the amount of people who work from home, decided not just to rule on a traditional employee-or-independent-contractor matter but also to create a new test out of whole cloth that would replace Borello.

AB 5 Is Riddled With Exceptions

Gone was Borello’s multi-factor test and in its place rose the new ABC test, wonderfully simple in its clarity, wonderfully inapplicable to modern economic life. In short, going forward from the court’s April 30, 2018, decision, independent contractors had to be truly independent in two main ways: they had to perform work at their own direction, not an employer’s, and the work had to be “outside the usual course of business” of the hiring entity.

The California Legislature could have overruled the court’s decision and changed the standard but, in the name of protecting what it saw as the workers’ rights elements of the ruling, decided instead to confect one of the great, bubbling public policy goulashes in the nation. The result was called AB 5.

You can be forgiven for thinking that physicians working in a hospital would be employees of that hospital, people providing health care working for an entity that provides health care, nice nestling that. No sir, no ma’am. Physicians love their independence and were allowed by AB 5 to keep their independent contractor status. So, too, were fishermen working for fishing companies.

In fact, AB 5 is riddled with exceptions to the spirit of Dynamex for those who knew the number of knocks on the door it would take and the right password to give to be let back into their previous work life. About 50 occupations, from landscapers, to yoga instructors, to even midwives, remain forcibly detained in AB 5’s cell.

This Entire Issue Is Not Just About Uber, Lyft and DoorDash Drivers

Assemblywoman Lorena Gonzalez, author of AB 5, announced on April 17 that she will spring musicians, composers, and songwriters, among others, when the Legislature returns. No such good news for those who play for symphonies or theme park bands. AB 5’s shackles are still around your ankles.

So, you see, this entire issue is not just about Uber, Lyft and Doordash drivers. It affects everyone who loves the independence of being their own boss, setting their own rates on the value of their work, and working when they want, and for whom they want. The gig economy is here to stay, and the coronavirus crisis has exponentially increased its importance.

“The bill would exempt specified occupations from the application of Dynamex, and would instead provide that these occupations are governed by Borello,” so leads off the Legislative Counsel’s Digest in the actual bill, now law, itself.

So, Borello’s superior usefulness hasn’t left completely. Right now, a great collective handwringing is going on about how to restart the state’s economy. Exempting all business-to-business relationships from the Dynamex decision would be one of the best initial starts. And for those cases in need of determining an employee from an independent contractor — Bring Back Borello!

About the Author 

John Kabateck is state director for the National Federation of Independent Business, John.Kabateck@nfib.org. He wrote this commentary for CalMatters, a public interest journalism venture committed to explaining how California’s Capitol works and why it matters.

RELATED TOPICS:

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Newsom Wants to Bypass Trump Tariffs With Direct CA Trade Deals

DON'T MISS

Markets Plunge With S&P 500 Down 6% and Dow Down 2,200 After China Retaliates

DON'T MISS

Fresno Police Searching for Missing 12-Year-Old Girl

DON'T MISS

Madera Community College Unveils New Multicultural and Veterans Center

DON'T MISS

Fusion Energy Race Is On. Two Local Lawmakers Want California to Lead the Way

DON'T MISS

Saturday’s Spring Fest to Showcase Free, Low-Cost Activities for Fresno Kids

DON'T MISS

LA County Reaches $4 Billion Agreement to Settle Sexual Abuse Claims at Juvenile Facilities

DON'T MISS

Fresno Man Sentenced to 14 Years in Prison for Deadly Marijuana DUI Crash

DON'T MISS

Judge Says US Must Return Maryland Man Who Was Mistakenly Deported to El Salvador Prison

DON'T MISS

These Fresno First-Graders Are Topping Their Peers in Reading

UP NEXT

As Dem Candidates for Governor Increase, They Wait for Harris to Decide

UP NEXT

Why Project Labor Agreements Are Good for Our Schools and Students: Opinion

UP NEXT

State Center Trustees Vote for Special Interest Giveaway Over Students: Opinion

UP NEXT

I Will Force Votes on Blocking Arms Sales to Israel: Sen. Bernie Sanders

UP NEXT

What Trump’s ‘Liberation Day’ Tariffs Could Mean for Americans: Fareed Zakaria

UP NEXT

Why the Nation Would Be Wise to Support a Third Term Amendment for Donald Trump

UP NEXT

If California Bails Out LA’s $1 Billion Budget Deficit, Beware the Slippery Slope

UP NEXT

Trump Has Had Enough. He Is Not Alone.

UP NEXT

The Real Crisis in California Schools Is Low Achievement, Not Cultural Conflicts

UP NEXT

Trump and Musk Are Suffering From Soros Derangement Syndrome

Madera Community College Unveils New Multicultural and Veterans Center

4 hours ago

Fusion Energy Race Is On. Two Local Lawmakers Want California to Lead the Way

4 hours ago

Saturday’s Spring Fest to Showcase Free, Low-Cost Activities for Fresno Kids

5 hours ago

LA County Reaches $4 Billion Agreement to Settle Sexual Abuse Claims at Juvenile Facilities

5 hours ago

Fresno Man Sentenced to 14 Years in Prison for Deadly Marijuana DUI Crash

6 hours ago

Judge Says US Must Return Maryland Man Who Was Mistakenly Deported to El Salvador Prison

6 hours ago

These Fresno First-Graders Are Topping Their Peers in Reading

7 hours ago

Fresno Burial Ceremony to Honor Five Abandoned Babies Set for Saturday

7 hours ago

Visalia Man Arrested for Soliciting Sex From Minor in Kingsburg

7 hours ago

Camalah Saleh Cruises to Win in Stormy Fresno State Student Elections

9 hours ago

Newsom Wants to Bypass Trump Tariffs With Direct CA Trade Deals

Gov. Gavin Newsom on Friday asked exporting countries worldwide to spare California their retaliatory tariffs, saying he plans to pursue dir...

3 hours ago

3 hours ago

Newsom Wants to Bypass Trump Tariffs With Direct CA Trade Deals

Specialist Anthony Matesic works on the floor of the New York Stock Exchange, Friday, April 4, 2025. (AP/Richard Drew)
4 hours ago

Markets Plunge With S&P 500 Down 6% and Dow Down 2,200 After China Retaliates

Fresno police are searching for Unique Hernandez, 12, last seen on Friday, April 4, 2025, near Inyo Street and Maple Avenue, wearing all black clothing and carrying a black backpack. (Fresno PD)
4 hours ago

Fresno Police Searching for Missing 12-Year-Old Girl

4 hours ago

Madera Community College Unveils New Multicultural and Veterans Center

4 hours ago

Fusion Energy Race Is On. Two Local Lawmakers Want California to Lead the Way

5 hours ago

Saturday’s Spring Fest to Showcase Free, Low-Cost Activities for Fresno Kids

5 hours ago

LA County Reaches $4 Billion Agreement to Settle Sexual Abuse Claims at Juvenile Facilities

Antonio de Jesus Orozco Montes Deoca, 30, was sentenced on Friday, March 4, 2025, to 14 years and 8 months in prison for a deadly marijuana DUI crash in 2022 that killed one woman and injured four others. (GV Wire Composite)
6 hours ago

Fresno Man Sentenced to 14 Years in Prison for Deadly Marijuana DUI Crash

Help continue the work that gets you the news that matters most.

Search

Send this to a friend