Under the recently passed Assembly Bill (AB) 5 in California, many businesses are undergoing a process to determine whether they need to reclassify their self-employed workers as employees. Workers who are categorized as employees are entitled to benefits such as minimum wage, overtime, and sick leave, while contractors are not.
Throughout the past year, AB 5 has created a great amount of confusion and frustration amongst many across the State of California – employers, independent contractors, and those who must enforce these policies are struggling to keep up with the updates of these regulations to ensure workers are properly classified. For example, this bill has directly affected rideshare companies such as Uber and Lyft, who are fighting a lawsuit that would require them to restructure their business models.
Meanwhile, California legislators are working to allow more exceptions from AB 5 in other industries to help clear up some of the confusion and narrow down who would truly benefit from AB 5. This past week, Governor Newsom signed off on amendments to the bill, known as AB-2257.
AB-2257 does not change the framework of the “ABC Test” that determines if a California worker is an employee or an independent contractor. It instead adds a list of industry exemptions, including (but not limited to) those who work as freelance writers and editors, photographers, photojournalists, newspaper cartoonists, various artists and musicians, and specific workers in insurance and real estate industries.
Employer Tips for Properly Classifying Workers in California
For businesses who are assessing whether they need to reclassify their contract workers as employees, below are some tips and guidance to consider:
- Conduct a review of each employee in your workplace to determine if, based on their duties and other factors, whether they are an employee or an independent contractor.
- If it is determined that the person is an employee, determine if the employee is exempt or non-exempt.
– Generally speaking, exempt employees operate with a high level of discretion and judgment and supervise other employees. Exempt employees are not eligible for overtime pay. In a state like California, employers are required to pay exempt employees at least twice the state minimum wage.
– Generally speaking, non-exempt employees are administrative and nature and operate at the direction of a manager or supervisor. Non-exempt employees are eligible to receive overtime pay. - If an employee is determined to be non-exempt, the employer must pay the employee for all overtime hours and ensure the employee receives all federal and state required meal and rest breaks. For example, in California, non-exempt employees should receive a 10-minute rest break for every four hours worked and a 30-minute meal break after 5 hours of work.
- For all employees, whether exempt or non-exempt, employers should ensure they are observing all federal and state equal employment opportunity, anti-discrimination, and harassment laws. Employers should also ensure they are carrying the necessary insurances, such as workers compensation insurance, and providing any required medical or other benefits. For example, in California, employers are required to provide both part and full-time employees with up to 3 paid sick days per year.
If you are looking for more information on the recently signed amendments, the California Legislative Information website provides the approved changes/exemptions and the full description of the bill.
Experienced Employment Law Attorney, Mediator, Arbitrator, Investigator, Legal and Media Commentator
Angela Reddock-Wright is an employment and labor law attorney, certified workplace and Title IX investigator (AWI-CH), mediator, and arbitrator in Los Angeles, CA. Known as the “Workplace Guru,” Angela is an influencer and leading authority on employment, workplace/HR, Title IX, hazing, and bullying issues.
Angela is a regular legal and media commentator and analyst and has appeared on such media outlets as Entertainment Tonight, Law and Crime with Brian Ross, Court TV, CNN, ABC, CBS, Fox 11 News, KTLA-5, the Black News Channel, Fox Soul – The Black Report, NPR, KPCC, Airtalk-89.3, KJLH Front Page with Dominique DiPrima, the New York Times, the Washington Post, the LA Times, Yahoo! Entertainment, People Magazine, Essence Magazine, the Los Angeles Sentinel, LA Focus, Our Weekly and the Wave Newspapers.
Angela also is a member of the panel of distinguished mediators and arbitrators with Judicate West, a California company that represents the gold standard in dispute resolution. She also owns her own law firm, the Reddock Law Group of Los Angeles, specializing in workplace and Title IX discrimination, harassment, and sexual assault investigations.
For more information regarding resources for employers, businesses and employees during this time, connect with Angela on LinkedIn for new updates, or contact her here.
This communication is not legal advice. It is educational only. For legal advice, consult with an experienced employment law attorney in your state or city.