Legislation and Regulation are two sides of the same coin and seem to be one of the primary focuses of what we do as an Association. We work alone or in concert with others on issues from the local to the national level. It is difficult to think of a year with more possible changes on the legislative side than 2019, an amazing statement based upon the dramatic changes we have seen in the last few years. While in some cases the challenges seem daunting, our membership and leaders continue to work for what we believe to be the best possible outcome for legal movers and the moving public.

While there are a number of bills in the California State Legislature this year that are important to CMSA membership, none is more impactful to a larger group of members than AB 5. In its current form, AB 5 as described in Legislative Counsel’s Digest (edited):

Existing law, as established in the case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law requires a 3-part test, commonly known as the “ABC” test, to establish that a worker is an independent contractor for those purposes.

Existing law, for purposes of unemployment insurance provisions, requires employers to make contributions with respect to unemployment insurance and disability insurance from the wages paid to their employees. Existing law defines “employee” for those purposes to include, among other individuals, and any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee, or is an employee of a person who holds or is required to obtain a valid state contractor’s license.

This bill would state the intent of the Legislature to codify the decision in the Dynamex case and clarify its application. The bill would provide that the factors of the “ABC” test be applied in order to determine the status of a worker as an employee or independent contractor for all provisions of the Labor Code and the Unemployment Insurance Code, except if a statutory exemption from employment status or from a particular obligation related to employment or where a statutory grant of employment status or a particular right related to employment applies. The bill would exempt specified professions from these provisions and instead provide that the employment relationship test for those professions shall be governed by the test adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 if certain requirements are met.

This bill would also expand the definition of employee, for purposes of unemployment insurance provisions, to include individuals who are defined as employees pursuant to the above-described provision of the Labor Code codifying the “ABC” test. Because this bill would increase the categories of individuals eligible to receive benefits from, and thus would result in additional moneys being deposited into, the Unemployment Fund, a continuously appropriated fund, the bill would make an appropriation. The bill would state that addition of the provision to the Labor Code does not constitute a change in, but is declaratory of, existing law with regard to violations of the Labor Code relating to wage orders of the Industrial Welfare Commission.

CMSA is working diligently on this issue, fully utilizing member feedback and intel, staff, legal counsel and lobbying resources in support of our membership and the industry at large. The unfortunate news is that AB 5 (Gonzalez) that codifies the Dynamex decision is a freight train running straight at the independent contractor model in an environment of a Super Majority Democratic legislature with a Democratic Governor. Many in the legislature see the IC model as a tax avoidance scheme and hear from their benefactors in organized labor that it is another way to abuse workers.

We have a scheduled meeting with Assemblywoman Lorena Gonzalez’s office (the author of AB 5). Our plan is to share our concerns and discuss possible pathways that would provide legal and compliant movers who utilize Independent Contractors the opportunity to continue to operate a model that has served their businesses, their Independent Contractor business partners, and their customers well for many years.

July 2019 - CMSA Communicator