Litigation

On September 18, 2019, Governor Gavin Newsom signed into law, Assembly Bill 5 (“AB5”), codifying the landmark case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), which made it more difficult for employers to classify workers as independent contractors.

Dynamex, and now AB5, establish 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. In addition, AB5 reaffirms the 3-part test of Dynamex, commonly known as the “ABC” test, to establish that a worker is an independent contractor.

Under the ABC Test, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that:

We’ve all heard the cliché saying, “It’s cheaper to keep her.” While it may be relevant in divorce, and a good reason to strive for a happy marriage, it may not be a good mantra for business. The greatness of American business is rooted in “Mom and Pop Shops” — small, family-owned, businesses with a minimum number of employees. The appeal of these small businesses are low start-up costs and exclusive control. However, exclusive control is just a facade as Mom and Pop still need to be compliant with the law.

California employment laws are expansive and evolving. According to the Department of Industrial Relations, thirty-two employment-related laws were amended in 2016, and in 2015, there were over 110 amendments or additions. In other words, unless Mom and Pop receive yearly training, they are already falling behind. This is the same for any company, but the difference is that larger companies can terminate their payroll personnel if a mistake is made. Pop can’t exactly fire Mom if she miscalculates overtime.

So, what is Pop to do? The answer is simple: get Mom some help so she doesn’t make a mistake. If a mistake is made, consult an attorney before it becomes a lawsuit. Here are three tips from an employment lawyer to help Mom and Pop avoid common obstacles in operating a business.

Articles Posted in Litigation

California Governor Passes AB5, Codifying Restrictions on Independent Contractors

“Help! I Can’t Fire My Wife” – What Family Businesses Need to Know About Avoiding Lawsuits