Walters: Who's an Employee and Who's Not?

Lorena Gonzalez finds herself in an unusual political position this year — and clearly relishes it.

Gonzalez, a Democratic assemblywoman from San Diego, is best known as a fierce warrior for worker rights and benefits, and carries a heavy load of legislation, usually on behalf of unions and other advocacy groups.
That puts her in constant conflict with business and employer interests. Her legislation routinely appears on the California Chamber of Commerce’s “job killer” list of bills that would, employers say, raise their costs and discourage investment.
She’s still fighting those battles, but a landmark decision last year by the state Supreme Court, tightening up the legal definition of an employee, is now sending business lobbyists to her, figuratively with hats in hand, to ask for exemptions from the court’s definition.
By applying a three-part test of a worker’s duties, the court’s ruling would shift countless thousands of workers from contractor status to payroll-employee status. Unions and other critics have long complained that rampant “misclassification” has deprived workers of basic rights and benefits, including the ability to unionize.
Gonzalez has introduced Assembly Bill 5, which would codify the decision, known colloquially as “Dynamex” for the package delivery company whose workers, having been classified as contractors, sued and won the right to be employees.

Employers Have Been Pressing for Exemptions

The key part of the Supreme Court’s “ABC” test — already used in many other states — is the declaration that a worker can be classified as a contractor only if he or she performs work that is outside of the usual course of the employer’s business.
Thus, the court ruled, since Dynamex’s delivery drivers are the core of what the company does, they must become employees.
Dynamex is widely seen as a blow to the so-called “gig economy” of companies dependent on part-time workers, with ride services such as Lyft and Uber the best-known examples. Their drivers provide their own vehicles, but the companies make the connection with riders and collect a portion of their fees.
Ever since the decision was issued a year ago, employers — and some contract workers — have been pressing for exemptions.
A coalition of major business groups, headed by the Chamber of Commerce, pledged to support the bill if Gonzalez would agree to broader exemptions and “provide a more progressive and holistic approach that fits today’s modern workforce.”
“The coalition seeks exemptions for workers “who prefer to control their own schedule,” including consultants, travel agents, and truck, taxi and gig economy drivers” and exemptions for “short-term projects and business-to-business contracts.”

The Bill’s Final Shape Is Very Uncertain

Gonzalez has given some ground, agreeing to exempt insurance agents, doctors, stockbrokers, investment advisers, and some salespersons. But there’s a long line of employers and workers in other sectors seeking similar treatment.

“I’m willing to have those discussions,” Gonzalez told the committee. “I’m committed to striking a balance.”
They appeared at the bill’s first committee hearing last week, pledging to support the bill if given exemptions. Many of those seeking relief were owner-operators of heavy trucks, who said they prefer the flexibility and independence of working as contractors.
However, she said the bill needs to “send a message that rings loud and clear — enough is enough,” about misclassification she said is hurting workers and costing the state billions of dollars in potential tax revenue from payroll work. “Something is wrong with the way we’ve allowed these companies to operate.”
The bill cleared the Assembly’s Labor Committee easily, but its final shape is very uncertain.
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