California cracks down on ‘independent contractor’ dodge
Art Pulaski, Secreary Treasurer, California AFL-CIO

SACRAMENTO, Calif.—The U.S. Labor Department may be ducking its duty to crack down on the bosses’ “independent contractor” dodge, but California isn’t.

By a 58-15 vote on May 29, the pro-worker Democratic-dominated State Assembly passed AB5, legislation to greatly curb bosses’ ability to arbitrarily misclassify workers as “independent contractors.” Six lawmakers did not vote.

Making workers contractors, not “employees,” under labor law bans their right to organize – and lets bosses get away with not paying Social Security and Medicare payroll taxes, workers comp and jobless benefits for them, either.

The California Labor Federation worked closely with lawmakers in drafting and passing the measure, sponsored by State Rep. Lorena Gonzalez, D-San Diego. It writes into a law the details of a state Supreme Court pro-worker, anti-contractor ruling last April, the Dynamex decision.

State Labor Federation Executive Secretary-Treasurer Art Pulaski, the group’s guiding force, called approval of AB5 “essential to rebuilding the middle class.”

“Millions of workers are living a life of insecurity because corporations refuse to abide by the law and offer the basic protections that come with being recognized as an employee. With passage of AB5 in the State Assembly, these workers are one step closer to the justice on the job they deserve,” he said.

Ending the independent contractor dodge is particularly relevant in the Golden State. Not only is California home to one of every eight U.S. residents and workers, but also to the largest group of unionists – and one of the largest, if not the largest, pool of misclassified “independent contractors.”

Those exploited workers range from adjunct professors in the sprawling state university and college system to port truck drivers in Los Angeles-Long Beach – whom the Teamsters are trying to organize – to the growing “gig economy” of Airbnb and similar firms to, most important, the high-tech firms of Silicon Valley.

AB5 “would immediately benefit working people who are living on the edge every single day as a result of being misclassified as independent contractors,” Pulaski said. He explained the legislation and the Dynamex court decision make it much more difficult for employers to misclassify workers.

The legislature’s general counsel’s digest of the measure says workers would be classified as “employees” – with labor rights and benefits under federal law – “for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law requires a 3-part test, commonly known as the ‘ABC’ test, to establish that a worker is an independent contractor for those purposes.”

“The bill would provide that factors of the ‘ABC’ test be applied in order to determine the status of any worker as an employee or independent contractor for all provisions of the (state) Labor Code and the Unemployment Insurance Code, unless another definition or specification of ‘employee’ is provided.”

Corporate interests first tried to defeat, then weaken, AB5. They succeeded only in exempting a few more occupations, leaving those workers liable to still be “independent contractors.”

Including their few additions, the only vulnerable workers would be “licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, a direct sales salesperson, real estate licensees, workers providing hairstyling or barbering services, and those performing work under a contract for professional services,” the legislative office said. But a state board would still set employment standards for the barbers and stylists.

AB5 now goes to the Democratic-run Senate, which has yet to schedule hearings. And otherwise pro-worker Gov. Gavin Newsom (D) didn’t discuss the independent contractor issue during his winning campaign last year, probably because he was caught between his two strongest blocs of supporters: organized labor and the high-tech firms of Silicon Valley.

Labor, of course, pushed the curbs on the independent contractors. Silicon Valley persists in classifying its workers that way. As governor, Newsom still hasn’t taken a position on AB5.

“Since the 1970s, entire industries have shifted from an employment model to an independent contractor model. Industries like trucking, courier, and construction have all been impacted and the result has been lower wages, increased insecurity for workers, and unfair competition for responsible contractors,” a state fed Q&A on Dynamex and the new law says.

“Calling workers independent contractors not only means no minimum wage or overtime, but it means all the risk is shifted from a company to an individual.”

“He or she must purchase and maintain a vehicle, pay for transportation expenses, and purchase their own tools. They are not entitled to a safe workplace or protected from sexual harassment or discrimination. That worker has no access to unemployment when the job ends, no workers compensation if injured on the job, and no right to organize to improve conditions.”

“Many of the same companies asking for ‘relief’ have been sued by their workers for misclassification that has cheated those workers out of pay. To legislatively ‘suspend’ a unanimous court decision that has already been in effect for several months simply to protect the corporate bottom line is both unprecedented and inappropriate.”

“The California labor movement will continue to strongly advocate for this landmark measure as it heads to the Senate,” Pulaski said. “We urge senators to follow the Assembly’s lead by passing this measure to provide an opportunity for a better life to millions of workers who have been cheated out of basic protections on the job.”


Mark Gruenberg
Mark Gruenberg

Award-winning journalist Mark Gruenberg is head of the Washington, D.C., bureau of People's World. He is also the editor of the union news service Press Associates Inc. (PAI). Known for his reporting skills, sharp wit, and voluminous knowledge of history, Mark is a compassionate interviewer but a holy terror when going after big corporations and their billionaire owners. El galardonado periodista Mark Gruenberg es el director de la oficina de People's World en Washington, D.C. También es editor del servicio de noticias sindicales Press Associates Inc. (PAI).