That’s because the effects of the law are far-reaching, surpassing its original purpose of regulating gig economy companies like Lyft and Uber.
So, AB-5 doesn’t just have those gig economy c level contact list companies worried about its impact. Other fields are still grappling with the law’s implementation and exemptions. Employees as varied as janitors, construction workers, yoga teachers, and medical technicians are still trying to make sense of it.
What is the AB-5?
The AB-5 law has a legal precedent in a 2004 case ruled by California’s Supreme Court. In it, a delivery driver sued Dynamex, the courier he worked for, after the delivery company forced its drivers to become independent contractors. The driver alleged that there were no grounds for such a change, as he continued to perform the same tasks he did when he was an employee.
Many companies commonly employed who stay closely connected with your business is well worth it this tactic by which they classify their employees as independent contractors. By doing that, the companies cut labor-related costs while retaining the same benefits from their workforce. The Supreme Court agreed with the driver and designed a new way to make it harder for California companies to use this tactic.
The court established a new test that controlled which workers could be classified as independent contractors.
- Be free of control and direction from the company
- Engage work outside the hiring company’s main business
- Has customarily engaged in the work they’ve been hired to do
The law’s goal, then, is to provide a legal framework that avoids that increased level of litigation while offering gig workers legal grounds to prevent them from falling victim to shady business tactics.
The AB-5 In Software Development
Without getting into whether the law’s qatar data intended goal can be achieved or not in practice, it’s best to understand how it could be applied in the IT industry, a sector whose workers would fail this test most of the time. How come? Because most IT consultants end up working for tech and IT companies, which means that they don’t meet the second point of the test. Thus, most IT workers would be reclassified as employees.