If you`re a California freelancer or independent contractor, you`ve likely heard of AB5. If you haven`t, it`s time to get informed.
AB5, also known as the «Gig Worker Bill,» was signed into law on September 18, 2019, and went into effect on January 1, 2020. The bill aims to reclassify many independent contractors as employees, ensuring they receive benefits and protections such as minimum wage, sick leave, and workers` compensation.
The law was designed to target gig economy companies like Uber and Lyft, who have been accused of misclassifying their drivers as independent contractors to avoid providing benefits and protections. However, the law also impacts many other industries, including freelance writers, graphic designers, and consultants.
Under AB5, a worker is presumed to be an employee unless they meet certain criteria, known as the ABC test. The criteria require that the worker:
A) Is free from the control and direction of the hiring entity in connection with the performance of the work
B) Performs work that is outside the usual course of the hiring entity`s business
C) Is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
These criteria can be difficult to meet for many independent contractors, particularly those who work for companies whose primary business is the same as their own. For example, a freelance writer who writes articles for a media company is unlikely to be considered independent if writing is the primary business of that company.
The law has been controversial since its inception, with some arguing that it restricts the freedoms of independent workers and will ultimately harm small businesses. Others argue that it`s necessary to provide basic protections to workers who have been exploited in the gig economy.
If you`re a freelancer or independent contractor in California, it`s critical to understand how AB5 impacts you. Some industries, such as the entertainment industry, have been granted exemptions from the law. However, many others have not.
If you`re concerned about the law`s impact on your business, you may want to consider speaking with an employment lawyer or contacting your local representative. In the meantime, stay informed and up-to-date on any changes to the law that may affect you.