The 2019 legislative session introduces several assembly bills that would codify classification standards held from preceding court cases—standards that would clearly delineate the distinctions between an employee and an independent contractor.

Assembly Bill 5, introduced by Assembly Member Lorena Fletcher (D-San Diego), seeks to codify the independent contractor classification presented in the Dynamex decision last year. Dynamex introduced the ABC Test for determining whether a worker is classified as an employee or an independent contractor. According to that decision, all three of the following factors must be met for a worker to be properly classified as an independent contractor:

• The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
• The worker performs tasks that are outside of the usual course of the hiring entity’s business.
• 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 Dynamex decision solely applies to California Wage Orders. Currently, the ABC Test is not an indicator used in workers’ compensation cases, but Assembly Bill 5 would propose application of the ABC Test from the Dynamex decision to all labor disputes, including workers’ compensation claims.

Alternatively, Assembly Bill 71, introduced by Assembly Member Melisa Melendez (R-Lake Elsinore), seeks to codify the test from the 1989 Borello decision. In Borello, the court outlined a 10-part test that remains the leading method for determining independent contractor status in a workers’ compensation case. The bill would add the following 10 factors to the Labor Code:

• Whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.
• Whether the one performing services is engaged in a distinct occupation or business.
• The work is usually done under the direction of the principal or by a specialist, without supervision.
• The skill required in the particular occupation.
• Whether the principal or the worker supplies the instrumentalities, tools and the place of work.
• The length of time for which the services are to be performed.
• The method of payment, whether by the time or by the job.
• The right to discharge at will, without cause.
• Whether the work is part of the regular business of the principal.
• Whether the parties believe they are creating the relationship of employer-employee.

Finally, Assembly Bill 223, introduced by Assembly Member Ken Cooley (D-Rancho Cordova), seeks to permit insurance companies to opt out of the ABC Test from Dynamex if the worker is properly licensed and enters into an agreement when:

• The agreement is voluntary.
• The worker is classified as an independent contractor.
• Each party has the right to terminate the contract.
• The worker is allowed to work outside the carrier’s place of business.
• The worker is financially responsible for costs relating to the work performed under the agreement.
• The worker is paid a commission, fees, incentives or all three.
• The worker is responsible for taxes.

The 2019 session could provide a seismic shift in the classification of independent contractors. We will keep you updated as developments unfold.