California Assembly Bill 5, which should have been officially named state government’s War on Independent Contractors, recently took a well-deserved, though not full, thrashing in court. It’s a favorable ruling for workers who prefer independence over the structure of hired employment.
Passed and signed in 2019, AB5 virtually outlawed gig work in California by establishing a three-prong test for classifying workers as either hired employees or independent contractors. The way the test is structured, it is virtually impossible for any worker in this state to participate in the gig economy, as all three conditions set forth must be satisfied.
While the standards of “A” and “C” can be met in many cases, prong “B” is the wall that can’t be scaled. It says that in order for a worker to be classified as an independent contractor, he or she must perform “work that is outside the usual course of the hiring entity’s business.” Under that requirement, a hair salon that relies on freelancers could put a personal trainer to work. Or a writer. Or musicians and dancers. Even Uber and Lyft drivers could perform work for the salon. But it can’t make use of freelance hair stylists because they don’t “perform work outside the usual course of the hiring entity’s business.”