The buzz around the Capitol is slowly growing as the Legislature’s summer recess comes to a close. Staffers have retired their jeans and flip flops and the Capitol cafeteria is open for business. CalChamber’s policy advocates are all trying to gear up for the month ahead because August is going to be a doozy.
In my world of labor and employment policy, we just have a few “minor” legislative issues left to tackle – sexual harassment litigation, lactation accommodation, pay data and now …. wait for it….Dynamex! If you haven’t heard of Dynamex Operations West v. Superior Court, start calling your hairdressers, doctors, music teachers, dog walkers, food delivery drivers (those nice people you call when you are too tired to pick up your own groceries), etc. They should know about this case because while the Supreme Court may have made an appropriate ruling for the parties involved and the limited facts of the case, the potential impact to independent contractors and freelancers is devastating.
I will try to keep the details of the case brief for those of you who don’t find employment law riveting. Basically, the California Supreme Court took almost 30 years of legal precedent and turned it on its head – no one in the employment law community saw it coming. For nearly 30 years, the Borello test was used to determine if someone should be classified as an employee or independent contractor. The major factor that was used was whether the hiring entity had significant control over the worker (the hours they work, how they work, where they work, etc). Now, as a result of the Dynamex decision, the control factor is just the first element of a 3-part test called the “ABC” test. The other elements are if you are in the same line of business as the hiring entity and if you are engaged in an independently established trade.
The “B” factor (i.e., the same line of business) is the real kicker here. Let’s use a hairstylist as an example. He rents a chair in a salon, has his own book of business, makes his own schedule, sets his own rate of pay, and has his own cosmetology license. Yet, he is in the same line of business as the salon. Now, under this ABC test, he is most likely an employee of the salon who has no control over the way he runs his business.
In summary, because of this court decision, the dream of being an entrepreneur is now in jeopardy no matter how you slice it. Likely gone are flexible work schedules and the ability to earn a supplemental income in our beautiful state where the average home costs more than $600,000. To make matters worse, without legislative intervention, this decision is being applied retroactively, potentially as many as four years back!
So, you ask, what can you do because the court decision is already published and this is the law? And what are we at CalChamber telling those doctors that by law cannot be employees of the hospital, or the youth soccer referee that officiates games each weekend to earn some extra money to send her kid to a better school, or the musician that works at the after-school enrichment programs when not out on the road playing gigs? We are telling all of them that their legislators must take action NOW to place the Dynamex decision on hold.
CalChamber is leading a coalition on this critical issue and you can find all the relevant information at our website, Imindependent.co. Or, feel free to reach out directly to me by phone or email to get involved. We need your help in persuading the Legislature during the last month of its session to enact a bill to put the Dynamex decision on hold (except with regard to the parties involved with the case) for the next year or two in order to allow our elected representatives to decide what is the best worker classification test to utilize in this state.