Bill Codifies Dynamex

Assembly Bill 5, which codifies the controversial Dynamex decision, is one step closer to becoming law as of May 29, with the California Legislature passing it with a vote of 59-15. The bill will now go on to the Senate for review. Dynamex was a landmark California Supreme Court ruling last year because it makes it far more difficult for a company to legally hire freelancers and independent contractors. The effect is that many such workers must instead be classified as employees, making businesses responsible for paying employment taxes and scheduling shifts for them. The bill was amended May 24 to exempt licensed workers in select industries from the decision – among them are some insurance and medical professionals, registered securities broker-dealers or investment advisers, real estate licensees, hairstylists or barbers, and direct sellers like those for Amway. Those performing work under a contract for professional services would also be exempt. “There was some deference given to the business community over that, but at the same time the business community is still looking for further exemptions for people who would like to control their own schedule, like an Uber or Lyft driver, a newspaper distributor, or a caterer, for example,” said Lonnie Giamela, partner at the law firm Fisher Phillips in Los Angeles. Another amendment makes the bill retroactive as well, Giamela said. “If there was a lawsuit or a challenge that examined a business’ practices over the past four years, if passed as is, it would use the ABC test going backwards in addition to going forward in its analysis,” he explained. Prior to the decision at the end of May, a coalition of business owners and independent contractors, business owners and independent contractors in the Valley area, Pasadena and Burbank held a press conference urging legislators to amend the Dynamex court decision. The Dynamex decision is widely seen by business interests and many freelancers as a major blow to the state’s gig economy and jeopardizes work opportunities for the nearly 2 million Californians who may want to maintain their independent contractor classification due to the flexible scheduling or additional income it provides. “We all have different jobs and experiences in the L.A. area, but we are all concerned that Dynamex will take away our flexibility and livelihoods,” said Mukesh Kashyap, a taxi driver with Yellow Cab Co., in a statement.