Update: California legislators approved Assembly Bill 5 in a 29 to 11 vote in the State Senate Tuesday night. The most recent amendment added manicurists to the list of professions affected, including both Uber and Lyft drivers.
Independent contractors across Santa Clara County might soon be classified as employees if a new bill continues to gain steam in the state Legislature.
But that’s only if they know how their profession aligns within the proposed bill.
Assembly Bill 5, authored by Assemblywoman Lorena Gonzalez (D-San Diego), would write into law a new three-part test in an attempt to regulate how businesses classify employees in an attempt to crack down on companies that misclassify employees to avoid paying benefits and payroll taxes. It passed the state Assembly in May and has been ordered to its third reading in the Senate.
Derived from the 2018 California Supreme Court decision regarding Dynamex Operations West, Inc v. Superior Court of Los Angeles, a worker would only be able to be classified as an independent contractor if all three of the test’s requirements are satisfied:
a. The worker is “free from control and direction” of the employer as it relates to performance of the work
b. The work is performed “outside the usual course” of the hiring entity’s business
c. The worker engages in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity
“Big businesses shouldn’t be able to pass their costs onto taxpayers while depriving workers of the labor law protections they are rightfully entitled to,” Assemblymember Gonzalez tweeted in May. The bill is largely aimed at the gig economy, including rideshare companies, such as Uber and Lyft, and delivery services, such as Postmates and DoorDash.
This type of misclassification cheats workers out of paid time off, health, unemployment and disability benefits, Gonzales said. However, opponents of the bill say some workers enjoy the freedoms of working as independent contractors and the bill could bankrupt certain industries that rely on those workers – including hairdressers, lawyers, physicians, newspaper carriers and freelance writers.
So, how do Bay Area workers feel about this potential change in employment status?
San José Spotlight reached out to a range of local workers – from Lyft and DoorDash drivers to barbers and manicurists – and dozens couldn’t say whether they supported the bill or not, primarily because they weren’t sure how or if it would affect them.
“People are either all the way in or they have no opinion, because what the bill does is confusing,” said Jenya Cassidy, director of the California Work & Family Coalition. “It doesn’t take us from ‘Now you’re a contractor’ and ‘Now you’re not.’ It’s really just implementing a decision that you never were a contractor.”
When it comes to Uber and Lyft, Cassidy said this law would narrow gaps of where those companies aren’t supporting workers and their families.
“What Uber and Lyft are doing is really exploiting people’s desperation and need to survive,” she said. “We have created this world where one job isn’t even enough, and that’s not fair.”
She said lobbying has played a large part in not only bringing public support to the bill, but also to help define who would or would not be affected by the changes. Amendments as of Aug. 30 show there are now a multitude of specific industry exemptions and clarifications.
Generally speaking, many licensed professionals and business-to-business contract workers would be exempt from the three-pronged Dynamex test.
But things get a little tricky when it comes to the newspaper, beauty and nail industries.
The Mercury News recently published an editorial citing concerns that the proposed bill would harm the company’s ability to hire newspaper carriers, as the costs of the additional employee staffing would be unsustainable.
When it comes to the beauty industry, many California Board of Barbering and Cosmetology licensed positions are exempt since they are often tenants renting space to offer their services. However, the exemption does not apply to manicurists, unless they are also licensed cosmetologists.
This disparity among board licensed beauty professionals is something that Precision Nails salon owner Jaime Schrabeck said should be amended. If not, the Carmel business owner, who runs an employee-based nails-only salon, said she’s concerned that manicurists would be excluded from employment, as they comparatively require the least amount of training and are only allowed to provide nail services.
“The law has to apply fairly to everyone. That’s part of this industry – because we don’t work alone,” said Schrabeck, a licensed manicurist. “Oftentimes, we are working side by side with these other license types. My fear would be if they were able to carve us out and leave us behind, it’s just one step closer to being deregulated.”
While she supports AB5 and its goal to correct employee misclassification, it’s only if the goal of fair employment status can be shared among all board licensed hair and nail professionals.
“It’s not equality to discriminate against one group,” Schrabeck added. “It’s certainly not going to help them protect themselves if they’re forced to be employed or to work on their own with their own establishment license. You’re going to hurt the very people that you intended to help.”
Orchid Nail Lounge owner Louisiana Pham agreed with that sentiment.
“Why are we in the beauty industry singled out?” she asked. “This is a very personal industry because relationships are made between clients and workers. As an owner, I have enough to worry about and don’t want to get in the way of someone’s personal business.”
Are you currently affected by the most recently-amended AB5? These professions would currently be exempt, if the individual or organization maintains an active license through their profession’s necessary and proper department, commission or entity:
Commercial fisherman on an American vessel
Human resources administrator