How many independent contractors will be classified as employees or be eliminated from work?
FOR IMMEDIATE RELEASE
Contact: John Kabateck, California State Director, [email protected], or Luke Wake, Staff Attorney, NFIB Legal Center, [email protected], or Tony Malandra, Senior Media Manager, [email protected]
SACRAMENTO, Calif., Dec. 19, 2019—The brunt of Assembly Bill 5 hits full force come January 1, when Californians working in more than 48 occupations will either be out on the street from the loss of their independent contractor status or will be classified as employees by the firms using their services, according to NFIB California, the state’s leading small-business association.
“We want not only our members but also all small-business owners to be aware of and prepare for changes in many of their livelihoods come the first of the year,” said John Kabateck, California state director for NFIB. “I can’t think of a better example of what damaging things can happen to real people when a court takes it upon itself to legislate rather than adjudicate and when a legislature exacerbates rather than ameliorates.”
Kabateck’s reference is to the Supreme Court of California’s 2018 Dynamex Operations West, Inc. v. Superior Court of Los Angeles County decision that pronounced especially rigid rules for independent contractors. Under the new ABC test, entrepreneurs are prohibited from working as independent contractors if the services they provide are essential to the hiring company’s business model.
In the wake of the Dynamex decision, it was left to the Legislature to sort out the mess. But rather than restoring the freedom of a contractor for legitimate entrepreneurs, the Legislature doubled down on the newly minted ABC test. And while the Legislature picked some winners who would receive special exemptions, innumerable other businesses were denied the exemptions they need to continue working as contractors.
According to NFIB Legal Center staff attorney Luke Wake, those occupations include franchisees, independent truckers, linguists, snow removal services, yoga instructors, interior designers, mid-wives, taxidermists, dieticians, florists, massage therapists, home entertainment system installers, hairdressers who rely on a salon’s credit card processing terminals, physical trainers, event planners, dog groomers, animal trainers, pool-cleaners, tutors, and possible others.
Wake identifies numerous affected businesses contracting with previously classified independent contractors. This includes businesses that refer customers to locksmiths, security or fire-alarm installers, tree trimmers, pest control service providers, auto-repair service providers, coaches, landscapers, childcare workers, travel guides.
Click here for a single page of Wake’s list.
“There is only one way out of this man-made mess and that is for the Legislature to exempt all legitimate business-to-business relations,” said Kabateck. “There’s enough revenue to be made from the normal course of business-to-consumer taxes. Our lobbying effort for this will begin by reminding everyone this is not about Uber and Lyft, it’s about hundreds of other independent contractor classifications.”
A collection of background information can be found at this source.
Keep up with the latest on California small-business at www.nfib.com/california or by following NFIB on Twitter @NFIB_CA or on Facebook @NFIB.CA
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For more than 75 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is a nonprofit, nonpartisan, and member-driven association. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses and remains so today. For more information, please visit nfib.com.
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