California Assemblywoman Lorena Gonzalez (D-San Diego) has introduced legislation intended to strengthen employee rights and define the role of an independent contractor.

The bill (A.B. 5), introduced this month, would add to state law the “ABC test” regarding independent contractors. The test was adopted unanimously by California’s Supreme Court in the case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex) in an April decision.

The court ruled in favor of workers when Dynamex, a package and documents delivery company, converted all of its drivers to independent contractors to save money.

In its decision, the court sided with the drivers and established the three part “A-B-C” test, which requires workers to be classified as independent contractors if:

A) The worker is “free from control and direction” of the employer as it relates to performance of the work.
B) The work is performed “outside the usual course” of the hiring entity’s business.
C) The worker engages in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

In its decision, the Court cited the harm to misclassified workers who lose significant workplace protections, the unfairness to employers who must compete with companies that misclassify, and the loss to the state of needed revenue from companies that use misclassification to avoid obligations such as payment of payroll taxes, payment of premiums for workers compensation, Social Security, unemployment, and disability insurance.

Independent contractors are not guaranteed the protection of workplace health and safety rights, including a minimum wage, paid sick leave, workers’ compensation benefits if injured on the job or unemployment benefits if laid off.

The proposed law will be heard in committee on January 3rd.

Misclassifying workers as independent contractors has been “a significant factor in the – rise in income inequality” in California, according to the bill.

“In a state with one of the country’s highest poverty rates, this court decision is crucial to helping Californians maintain solid employment in an economy that’s left millions struggling,” Gonzalez said in a Dec. 5 press release. “Individuals are not able to make it on three side hustles. That shouldn’t be the norm. That shouldn’t be accepted.”