How Will This New Law Affect Your Business?

October 15, 2019
Sacks & Zolonz, LLP
Los Angeles uninsured employer’s attorney

California businesses may soon have to change the way they operate or essentially go out of business altogether. By now, most companies know about Assembly Bill 5. It will go into effect Jan. 1, 2020, and will change the way many independent contractors are classified. At Sacks & Zolonz, LLP, we are here to make sure you stay in compliance with the law, including regulations regarding workers’ compensation. Today, we want to discuss this bill and how it could affect you. When you need a Los Angeles uninsured employers attorney, call us today.

What is going to change?

Assembly Bill 5 (AB-5) dramatically changes how workers are to be classified in this state. The bill, aimed at the “gig economy” workers, is supposed to help ensure a large swash of workers in California are treated fairly when it comes to wages, benefits, healthcare, and more.

AB-5 sets the standard under three California employment laws for determining whether a worker is an employee of an independent contractor. Essentially, the bill aimed to codify the state Supreme Court decision Dynamex Operations West, Inc v. The Superior Court of Los Angeles County that was handed down last year.

Many people, when discussing AB-5, bring up how this will help gig workers like Uber and Lyft drivers have more workplace protections.

But how will this affect your business?

Many businesses use independent contractors to perform some part of their operation. Using independent contractors help employers from having to have another full-time staff member they do not need. In turn, this saves money by not having to pay their payroll taxes, employee benefits, healthcare plans, unemployment insurance, vacation time, etc.

We need to look at the ABC test that AB-5 puts into law. If the worker in question meets the following, then they can be considered an independent contractor:

  1. The worker is free from control and direction of the hiring entity.
  2. The worker performs work that is outside the usual course of the hiring entity’s business.
  3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature of the workers hired to perform.

If you fail to properly classify an employee, you could face major fines and even criminal charges, particularly when it comes to state-mandated requirements such as wages, overtime pay, workers compensation coverage, and more.

Let us help you through this today

If you own a business, whether you use regular employees, independent contractors, or a combination of both, you may need to speak to an attorney soon. With the laws changing in this state, you want to stay on top of any changes that need to be made in your business. The consequences of improperly classifying employees should not be ignored. At Sacks & Zolonz, LLP, we are ready to get to work on your behalf. When you need a Los Angeles uninsured employers attorney, you can contact us for a consultation of your case by clicking here or calling 310-216-7778.

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