The Gig Economy
On September 18th Governor Newsom signed into law Assembly Bill 5. The law reclassifies most freelance and contract workers as full-time employees that are eligible to receive minimum wage and benefits. The law uses what is called the ABC test to determine who classifies as a freelancer, and who should be a full employee. The law also gives exemptions to some types of freelancers including: architects, insurance agents, lawyers, doctors, grant writers, real estate agents, direct salespersons, and construction subcontractors.
The consequences of this law are reaching far into the employer’s pockets and the incomes of many gig workers. Many of these gig workers such as ridesharing drivers, truck drivers, and writers are suffering these consequences. Many people who provide these services choose these employment models in order to provide themselves the flexibility of earning wages with extreme flexibility on when and if they choose to work.
California truck drivers have been deeply impacted by this bill. Most truck drivers are 1099 independent contractors called owner-operators that are paid by the load or by the mile driven as opposed to by the hour. Two California truck drivers have sued the State of California to prevent the bill from impacting the trucking industry. United States District Judge Robert Benitez granted the request for a temporary restraining order that prevents AB 5 from impacting motor carriers pending the court’s resolution.
Employers are facing difficult choices and making cuts to their workforces because they cannot afford to convert all independent contractor type employees to a full-time employee.
For more information, contact your Stockton bankruptcy attorney at 209-438-4990.
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