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 4 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

$11M State Grant Will Help Fresno’s Emergency Shelter Beds, Mental Health Services

DON'T MISS

City Council Finally Gives New NW Fresno Costco a Green Light

DON'T MISS

Prop 47 Reformers Send Nearly a Million Signatures to Sacramento

DON'T MISS

BTC Scammy Scams, Impact of Blockchain on Global Markets: Crypto The WonderDog Show

DON'T MISS

US Vetoes Full United Nations Membership for Palestine

DON'T MISS

Barbara Corcoran: 1% Interest Rate Drop Will Send Housing Prices ‘Through the Roof’

DON'T MISS

Cavinder Twins Are Returning to Miami for Their Last Season

DON'T MISS

California Sets Long-Awaited Drinking Water Limit for ‘Erin Brockovich’ Contaminant

DON'T MISS

Savannah Bananas Dominate Social Media, Sell Out Stadiums Nationwide Including Fresno

DON'T MISS

Biden is Off on Details of His Uncle’s WWII Death as He Calls Trump Unfit to Lead the Military

UP NEXT

Local Leaders Must Put Their Shoulders Into Making Fresno ‘Education City USA’

UP NEXT

Carbon Capture Isn’t Nearly as ‘Green’ as Fossil Fuel Promoters Make It Sound

UP NEXT

CA’s High Construction Costs Limit Housing. A Supreme Court Decision Might Help

UP NEXT

A Fresno Edition of Monopoly? That’s Capitalism at Work, Baby!

UP NEXT

Biden’s Embrace of Trump’s Tariffs Could Spell Trouble for His Reelection: Fareed Zakaria

UP NEXT

‘Digital Democracy’ Project Penetrates California’s Opaque Political Processes

UP NEXT

While California Politicians Skirmish Over Housing, the Shortage Keeps Growing

UP NEXT

As PG&E Bills Skyrocket, Will California Lawmakers Hold Anyone Accountable?

UP NEXT

Trustees Owe a Nationwide Superintendent Search to Fresno’s Children

UP NEXT

Taxes Are on the November Ballot in Monumental CA Showdown

BTC Scammy Scams, Impact of Blockchain on Global Markets: Crypto The WonderDog Show

10 hours ago

US Vetoes Full United Nations Membership for Palestine

11 hours ago

Barbara Corcoran: 1% Interest Rate Drop Will Send Housing Prices ‘Through the Roof’

11 hours ago

Cavinder Twins Are Returning to Miami for Their Last Season

12 hours ago

California Sets Long-Awaited Drinking Water Limit for ‘Erin Brockovich’ Contaminant

13 hours ago

Savannah Bananas Dominate Social Media, Sell Out Stadiums Nationwide Including Fresno

14 hours ago

Biden is Off on Details of His Uncle’s WWII Death as He Calls Trump Unfit to Lead the Military

15 hours ago

Big Names in Rap, Christian Music, and Comedy Headline Must-See Weekend Entertainment

16 hours ago

US and UK Issue New Sanctions on Iran in Response to Tehran’s Weekend Attack on Israel

16 hours ago

Will State AG Rob Bonta Jump Into 2026 Race for CA Governor?

16 hours ago

$11M State Grant Will Help Fresno’s Emergency Shelter Beds, Mental Health Services

Fresno got a $10.9 million piece of California grant money to shelter people living in encampments. The money from California’s $192 m...

9 hours ago

9 hours ago

$11M State Grant Will Help Fresno’s Emergency Shelter Beds, Mental Health Services

9 hours ago

City Council Finally Gives New NW Fresno Costco a Green Light

10 hours ago

Prop 47 Reformers Send Nearly a Million Signatures to Sacramento

Crypto the WonderDog Show
10 hours ago

BTC Scammy Scams, Impact of Blockchain on Global Markets: Crypto The WonderDog Show

11 hours ago

US Vetoes Full United Nations Membership for Palestine

11 hours ago

Barbara Corcoran: 1% Interest Rate Drop Will Send Housing Prices ‘Through the Roof’

12 hours ago

Cavinder Twins Are Returning to Miami for Their Last Season

13 hours ago

California Sets Long-Awaited Drinking Water Limit for ‘Erin Brockovich’ Contaminant

MENU

CONNECT WITH US

Search

Send this to a friend