At least that is what Xavier Becerra asserts.
Perhaps he's right, but there are big implications if this is true. The
most recent event is a new answer to the question: when is someone an employee,
and when are they a contract worker? AAF’s Isabel Soto has an analysis,
but here’s the short version.
Until just recently, this question was decided using the “Borello standard,” a multi-pronged approach that uses factors like method of payment, investment in equipment, length of time that duties are performed, and — critically — whether the employer has the right to control the worker or how the work is done. But California Governor Gavin Newsom recently signed into law Assembly Bill 5 (AB5), which asserts that all workers are employees unless they pass a three-pronged "ABC test":
Until just recently, this question was decided using the “Borello standard,” a multi-pronged approach that uses factors like method of payment, investment in equipment, length of time that duties are performed, and — critically — whether the employer has the right to control the worker or how the work is done. But California Governor Gavin Newsom recently signed into law Assembly Bill 5 (AB5), which asserts that all workers are employees unless they pass a three-pronged "ABC test":
1. The worker is free from the control and direction of the
hirer in connection with the performance of the work, both under the contract
and for the performance of such work;
2. The worker performs work that is outside the usual course of the hiring entity’s business; and
3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
The basic spirit motivating the law is that employers
are systematically classifying workers as contract workers instead of employees
in order to cut costs.2. The worker performs work that is outside the usual course of the hiring entity’s business; and
3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
The implications are huge, however, if ABC became the law of the whole United States. The impact is not limited to tech companies, especially Uber and Lyft, which got the attention in the California debate. Tech represents only a small portion of those companies that would be affected by national reclassification. According to Soto, “jobs enabled by online platforms made up only 1 percent of all jobs in 2017, but 10.1 percent of all workers are in alternative work arrangements. Of those alternative workers, nearly 70 percent are independent contractors. Industries that stand to witness the most significant impact from a nationwide reclassification of workers include construction (23 percent), professional and business services (18 percent), and financial activities (11 percent).” Moreover, those workers contribute over $1.6 trillion, or 8.5 percent of GDP.
Changing the rules of the game on something bigger than the Great Recession is no small matter. Will the nation go as California has gone?
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