YOUR LABOR OF LOVE: A NEW WAVE OF CALIFORNIA EMPLOYMENT LAWS FOR 2020.

• Author: Terman, Mark E.

More than 300 bills introduced in the 2019 California Legislative session mention "employer," compared to 589 bills in 2018. While most bills bogged down or died in the Legislature, many of the bills--which likely would have been vetoed by former Gov. Jerry Brown--were signed into law by first-term Gov. Gavin Newsom, ushering in a new wave of more regulation of employers in the Golden State.

The following are essential elements of many key state Assembly Bills (AB) and Senate Bills (SB) that became law Jan. 1 (unless otherwise noted) and affect private employers.

Independent Contractor Classification Gauntlet

Establishing lawful independent contractor classification in California has never been certain or simple, as it can bypass legal rights and benefits available only to employees. The same set of facts could yield a different outcome depending" on the tests applicable in court or a specific state agency.

The cornerstone of most tests has been the 1989 California Supreme Court decision, Borello & Sons, Inc., v. Department of Industrial Relations. Borello cast multiple factors to evaluate independent contractor classification. The primary focus is the degree of control (or right to control) exercised by the hiring entity over the manner and means of the workers' performance. Secondary factors include whether the worker performs services for companies other than the hiring entity, purchases his or her own equipment or tools, sets his or her own hours, contracts for discrete units of work rather than an indefinite time, hires his or her own helpers/employees, and assumes risk for profit and loss.

AB 5 codifies and expands a new standard: the "ABC test," established in 2018 by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. The ABC test presumptively considers all workers to be employees and forces a hiring business to bear the burden of proving each of the following criteria for proper independent contractor classification:

1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under contract for the performance of the work and in fact;

2. The worker performs work 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.

Similar to the right-of-control prong under Borello, Part A of the ABC test focuses on whether the worker, in contract and in practice, exercises autonomy over the performance of the contracted services. Part C focuses on whether the employee actually engages in an established business for him or herself.

Part B is more difficult to establish. It focuses on whether the services rendered under contract are beyond the scope of the hiring entity's usual course of business. The Dynamex Court clarified this to mean whether the work performed is distinguishable from that which an employee of the company-would be expected to perform.

The ABC test applies to claims based on the Labor Code and Unemployment Insurance Code and, by July 1, it also will apply to Workers' Compensation Code claims. AB 5 does not apply to other claims, such as those under the Fair Employment and Housing Act that resides in the Government Code.

AB 5 also establishes seven groupings, covering about 50 industry-specific professions, trades and relationships, for which the ABC test docs not apply, but are instead subject to Borello and other contractor classification criteria in the statute. Many of these exemptions are highly specific with multi-part criteria and definitions. The exemptions include licensed accountants, insurance agents, physicians, lawyers, engineers, securities broker-dealers and investment advisers, and workers in certain other professional service and business sectors. One sector that did not receive an exemption: The gig economy.

This bill amends Sec. 3351 of the Labor Code, adds Sec. 2750.3 to the Labor Code, and amends secs. 606.5 and 621 of the Unemployment Insurance Code.

More Time to Sue Employers

Pursuit of claims alleging employment discrimination, harassment and retaliation under the California Fair Employment and Housing Act requires filing of a verified complaint with the Department of Fair Employment and...