California AB-5 law for independent contractors went into effect Jan 1

[LdiJ]

There are already serious economic concerns as independent truckers may be shut out of business and some of the major trucking concerns here could be forced to move their businesses out of state (bye bye tax dollars). Though, there is also the question of whether a trucking company contracting workers from their HQ in AZ would then have to make them "employees" when they travel to and from CA. Couple this with new mandates for clean but fuel IN-efficient trucks, and we can expect everything to go up here in the near future. Though, many in the trucking industry expect they might be able to obtain a waiver for their industry given the economic impact of these changes.

There will be unintended economic consequences to this, and one of them will be that some people seeking extra money (like many Uber and Lyft drivers, Doordash and Grubhub folks, etc.), and truckers will be either forced out or severely curtailed.

It would seem to me that independent truckers, and Uber, Lyft and other drivers would meet the qualifications to be independent contractors. I see the law as only targeting those employers who have been misclassifying employees as contractors all along.

 

[Taxing Matters]

It would seem to me that independent truckers, and Uber, Lyft and other drivers would meet the qualifications to be independent contractors. I see the law as only targeting those employers who have been misclassifying employees as contractors all along.

Oh no, the whole intent of the law was to target the gig economy, and Uber and Lyft in particular. This is not a law the simply confirms existing classification rules, it expands the reach, and intentionally so.

 

[LdiJ]

Oh no, the whole intent of the law was to target the gig economy, and Uber and Lyft in particular. This is not a law the simply confirms existing classification rules, it expands the reach, and intentionally so.

Interesting. It seems counterproductive if that is the case. Uber and Lyft drivers provide their own equipment and set their own hours. That is some of the classic indications of independent contractors. I wonder why that industry was targeted?

 

[westside]

I apologize if links aren't allowed, but a good article on the seeming randomness of the law:
https://www.sacbee.com/opinion/california-forum/article238511743.html

 

[CdwJava]

It would seem to me that independent truckers, and Uber, Lyft and other drivers would meet the qualifications to be independent contractors. I see the law as only targeting those employers who have been misclassifying employees as contractors all along.

Apparently they don't all see it that way because Uber and Lyft are preparing either for legal fights or to change their business models. And trucking companies and independent truckers have been prattling on about it for quite some time. The three-pronged test for an independent contractor does not seem to be met by these businesses. Or, at least, opinions seem to be mixed, at best.

 

[chrisjchrisj]

"Wow, you really do not understand what is going on at all do you? You don't understand that you have potentially (or actually) been breaking the law for many years and that your state (CA) has finally become fed up with it and has put measures in place to force you to honor the law."

Apparently it is you LdiJ who "really do not understand what is going on at all". And I have been breaking the law for years? What a conclusion jump!

"The idea that a functioning human being can't be trusted to make the call for him or her self whether they are being "abused" and need protected from a 2nd income by people who believe they can run that person's life better than he or she can"

yes, I agree "by people who believe they can run that person's life better than he or she can", it's about bringing socialism to California. All these subcontractors chose their gigs voluntarily, they aren't being abused, they have the freedom to choose another path anytime.

 

[LdiJ]

"Wow, you really do not understand what is going on at all do you? You don't understand that you have potentially (or actually) been breaking the law for many years and that your state (CA) has finally become fed up with it and has put measures in place to force you to honor the law."

Apparently it is you LdiJ who "really do not understand what is going on at all". And I have been breaking the law for years? What a conclusion jump!

I chose the word "potentially" because I do not know whether or not you have been misclassifying the worker under federal law. You have never said what the worker actually does or what your industry is. And yes, I did misunderstand the scope of the law. It does seem that it goes beyond enforcing existing rules.

"The idea that a functioning human being can't be trusted to make the call for him or her self whether they are being "abused" and need protected from a 2nd income by people who believe they can run that person's life better than he or she can"

yes, I agree "by people who believe they can run that person's life better than he or she can", it's about bringing socialism to California. All these subcontractors chose their gigs voluntarily, they aren't being abused, they have the freedom to choose another path anytime.

I still disagree with you about this part. Many workers accept subcontractor or independent contractor jobs just because they are having a hard time finding regular jobs. Many companies absolutely misclassify there workers as independent contractors or sub contractors when what the workers do clearly indicates that they are employees. They do this to avoid providing benefits, to avoid providing worker's compensation insurance, to avoid providing unemployment insurance, and to avoid paying the employer's share of Social Security and Medicare Taxes. The laws absolutely SHOULD come down hard on those types of companies.

In my tax practice I have seen full time insurance office employees treated as contractors, office staff for construction companies treated as contractors, office staff for all kinds of companies treated as contractors, assembly line workers in factories treated as contractors, doctor's office staff treated as contractors, retail staff treated as contractors, and many many other situations where workers were clearly misclassified.

 

[eerelations]

Back to your original question OP - if you want to comply with the law and your subcontractor doesn't, you have no choice but to fire him. If you don't want to comply with the law, then keep using him the way you always have, and suffer the consequences. (And please note, disagreeing with the law won't get you out of said consequences.) That's about it.

 

[chrisjchrisj]

Thanks for all the replies.
Regarding the classification of an employee unless the employer can establish "(B) that the worker performs work that is outside the usual course of the hiring entity’s business", does anyone know if the worker performs some work that is outside of the usual course of the hiring entity's business, but also performs some work that is not outside of the usual course of the hiring entity's business, how that might be viewed regarding the law?

 

[PayrollHRGuy]

Thanks for all the replies.
Regarding the classification of an employee unless the employer can establish "(B) that the worker performs work that is outside the usual course of the hiring entity’s business", does anyone know if the worker performs some work that is outside of the usual course of the hiring entity's business, but also performs some work that is not outside of the usual course of the hiring entity's business, how that might be viewed regarding the law?

That's one of those things that the courts will likely have to describe.

But as has been mentioned, if you are working with a bonified entity you shouldn't have a problem.

Think of it this way. There are companies out there that ship their own products buy also contract Amazon to ship their products. The law isn't going to require that all of the employees of Amazon become employees of the individual companies.