With new laws going into effect this month, over 50 community members attended a Jan. 8 workshop that covered elements of Assembly Bill 5, a new state law regarding the classification of independent contractors.
The San Benito County Arts Council and San Benito County Chamber of Commerce hosted the workshop at the Veterans’ Memorial Building in Hollister with presenters Paul Rovella of JRG Attorneys at Law and Julie Baker, executive director of Californians for the Arts and California Arts Advocates.
Rovella told attendees that though AB 5 is new, the legislation was codifying and applying the 2018 Dynamex Operations West, Inc. v. Superior Court decision in which the California Supreme Court applied the ABC test to help determine if a worker should be classified as an independent contractor or an employee. To make the determination, the three-part test analyzes how much control the employer has over a worker’s time, if the worker performs services outside of the employer’s primary scope of business, and if the worker provides the same services to other companies.
Employers and contractors should also be familiar with the Borello test, Rovella said, which stems from the 1989 case S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations in which the California Supreme Court analyzed employers’ control, workers’ special skills, type of payment, and rights to termination.
“Every situation has different factors, different considerations, different people, different terms, different contracts,” Rovella said. “So this may not entirely, 100% apply to you. If you have questions about it, by all means contact an attorney.”
In his presentation, Rovella listed some professions exempt from AB 5: licensed insurance agents, physicians and attorneys. However, the Borello test still applies. He also said employers should take an outside perspective (how others perceive the categorization) to understand if classifying a worker as an independent contractor could be perceived as willfully evading financial responsibility.
AB 5, also known as the gig worker law, was created due to concerns of exploitation of workers such as Lyft and Uber drivers. Other jobs affected by the new law include truck drivers, commercial janitors and physical therapists.
Baker centered her presentation on how the arts industry is affected by AB 5, with a focus on lobbying to have artists exempt from the new law. While the law is intended to protect workers, it will only help workers in certain industries, she said.
Their lobbying efforts led to getting an exemption for “fine artists.” However, AB 5 does not define fine artists, which leaves it open to interpretation.
“Lawyers will know that that means that you can determine what fine artists means to you,” Baker said. “It’s not based on the Bureau of Labor Statistics code, it’s not based on the labor code, it just says fine artists.”
“This is what often happens in legislation,” Baker said. “They go full force. They’re going to do this big thing and then there are all these unintended consequences like in the arts, yoga studios—all sorts of folks that are going ‘wait a second, this isn’t how our industry works.’”
Baker pointed out that AB 5 was not going to go away and said that other states are following California’s lead. She said businesses need to look for a way to make it work. In a survey of 250 people in the arts industry, 57% said they would close their business or cease programs because of AB 5, and 80% said the law will affect their ability to offer programs, she said.
Rovella and Baker were asked whether a contractor agreement between a business and a worker was valid for “gray area” situations. Rovella said those contracts are deemed invalid and unenforceable. Baker also said businesses can reference the Department of Industrial Relations page on independent contractors for information on AB 5.
Chamber CEO Michelle Leonard told BenitoLink that it was important to have an AB 5 workshop in the county because many industries were being impacted.
“It was really important for us to get professionals in here to clarify so we could all understand how to identify if their subcontractor needs to be [classified as] an employee, and also just have that time to ask questions that reflect on their business,” Leonard said.