It was clear almost from the first that the California Supreme Court, in a ruling in April 2018, threw the business models of Uber and Lyft companies for a loop.
The thrust of the ruling was that drivers for those companies had been improperly classified as “independent contractors” when in fact they’re employees, entitled to most of the benefits and legal protections employees receive.
Things only looked worse for the companies when the Legislature started considering a bill to enshrine the court ruling into law.
… It may be true that flexibility under an employer-employee arrangement would be inconvenient for the employers. But it’s hardly impossible. The companies’ “flexibility” argument is merely being bootstrapped to support their desire to pay drivers as little as they can get away with while saddling the drivers with their own expenses.
The debate in California centers on the state Supreme Court’s so-called Dynamex decision. The case is named after Dynamex International, a package and document delivery company that in 2004 abruptly reclassified all its drivers as independent contractors, not employees.
Dynamex didn’t change the drivers’ work responsibilities, but removed them from the jurisdiction of California wage and hour rules. From then on, the drivers were required to provide their own vehicles and pay for all their own expenses, such as fuel, tolls, wear and tear on their vehicles and insurance, including workers’ compensation insurance. They no longer received overtime pay.
… The Dynamex ruling enshrined the “ABC test” into California law as a guide to the difference between employees and independent contractors. The test says workers are employees unless they’re (A) independent of the hiring entity’s control and direction about how they perform their work; (B) engaged in work different from the hiring entity’s business; and (C) conducting an independent business in the same field as the work they’re doing for the hiring entity.
… The Dynamex ruling left a few loose ends, some of which would be tied up by AB 5. The measure would apply the ABC test to a wide range of workplaces and to unemployment insurance and workers’ compensation coverage, in addition to wage and hour rules alone. It also would carve out a roster of professions from the test, including doctors, real estate salespersons, securities and insurance brokers and hairstylists who rent their booths from salon owners.