ASSEMBL ASSEMBLY Y BILL 5 BILL 5 Signed into law on September 18, - - PowerPoint PPT Presentation
ASSEMBL ASSEMBLY Y BILL 5 BILL 5 Signed into law on September 18, 2019 by Governor Newsome Effective January 1, 2020 Codifies the decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) ( Dynamex )
Signed into law on September 18, 2019 by Governor Newsome Effective January 1, 2020 Codifies the decision in Dynamex Operations West, Inc. v. Superior Court
Expands Dynamex to the Labor and Unemployment Insurance Codes. Most contentious piece of legislation during 2019 Session
Ann M. Grottveit March 26, 2020
Worker is free from control and direction of the business. ➢ Focus: the degree to which the business has retained the right of control over the work, by contract or in actual practice (Borello) Work performed is outside the usual course of business. ➢ Is the work incidental or an integral part of the business? ➢ Example: Retail manufacturer hires plumber vs. work at home seamstress Worker customarily engages in the independently established trade, occupation
➢ Focus: the burden / benefit of self-employment through incorporation, licensure and advertisement
2
All workers are presumed to be employees unless the business proves the following:
3
Occupations: Lawyers Doctors Veterinarians Architects Engineers Accountants Securities brokers Investment advisors Commercial fishermen Construction industry subcontracts Real estate agents and brokers Cosmetologists Barbers Professional services contracts: HR administration Marketing Graphic arts Journalists Photographers
*Proposed 2020 legislation also seeks to exempt marriage and family therapists, loggers, musicians, independent truckers, youth sports referees, freelance writers, editors, and newspaper cartoonists.
California Trucking Association v. Becerra et al,
United States District Court, Southern District of California The California Trucking Association (CTA) challenged AB 5 asserting that Prong B is preempted by the Federal Aviation Administration Authorization Act of 1994 (FAAA). December 31, 2019 - District Court agreed and entered a Temporary Restraining Order (TRO) finding that CTA had demonstrated that AB 5 mandates that motor carriers treat owner-operators as employees and that irreparable harm was likely due to the risk of governmental enforcement actions and penalties. January 16, 2020 - A preliminary injunction was entered as to any motor carrier
4
The People of the State of California v. Cal Cartage Transportation,
Superior Court of Los Angeles
In a similar case in state court, the Los Angeles Superior Court has also found Prong B is preempted as to motor carriers and their drivers by the FAAA. The LA Superior Court found that under the ABC test, motor carriers were prohibited from using independent owner-operator truck drivers.
5
Olson et al v. Becerra et al,
United States District Court, Central District of California (Uber)
This case challenges AB 5 on first amendment and equal protection grounds. The plaintiffs did not seek a TRO, and the preliminary injunction was denied on February 10, 2020.
American Society of Journalists and Authors, Inc. v. Becerra,
United States District Court, Central District of California
TRO sought and denied by the Court due to plaintiffs’ failure to demonstrate an emergency need for relief. Motion to dismiss granted on March 20, 2020.
1 Grower Owned Trucks Use Grower employees 2 Trucking Company Qualifies for the business-to-business exemption Recommend written contract that establishes the following: ➢ Independent business entity (LLC, corporation, sole proprietorship) with separate location ➢ Advertises and contracts with businesses other than you ➢ Has all required business licenses and registrations 3 Dispatch Company ➢ Should have a contract with the Dispatch Company that establishes the business-to- business exemption ➢ Carriers will be considered employees of the Dispatch Company ➢ Joint Employer analysis is not a part of AB 5, only concern is that Driver is an employee ➢ Significant burden on Dispatch Company will lead to industry disruption 4 Owner Operator / Independent Truckers ➢ Prohibited under AB 5 ➢ Will not qualify for the business-to-business exemption ➢ Licensing issue: Owner Operators lease their services and trucks and lack independent
➢ Separate business location and contracting requirements are a barrier for the FAAA ➢ Cannot negotiate their own rates with the motor carrier, pursuant to Federal law ➢ Motor carriers can contract with Independent Truckers, pursuant to the Preliminary Injunction.
6
7 Temporary Personnel Services
Office work, farm labor for hand-picking or dryer work Business model is that worker is employee of the Temporary Service business, similar to Office Temps or Farm Labor Contractors. Business-to-business exemption applies and contractual relationship makes clear that FLC is a business as noted above
Seasonal Work
Same analysis as above Considered employees unless employees of a separate entity, such as a Farm Labor Contractor.
Irrigators/Pesticide Applicators
Employees of Wilbur-Ellis or a separate business and qualify for the business-to-business exemption.
Aerial Application, land leveling, custom harvesting Business to Business exemption
services
and registrations to perform services
Farm where a portion is custom harvested by neighbor
agreement between farms
employee quits
Other Considerations
contractors)
8
9
➢ Sponsored by Uber, Lyft, and DoorDash ➢ Seeks to place referendum on CA 2020 November ballot ➢ Exempt ride-hailing companies ➢ Require ride-hailing companies pay: ▪ Drivers at least 20% more than minimum wage ▪ $0.30 per mile for wear and tear ▪ Stipend for healthcare costs ▪ Accident insurance
Protect App-Based Drivers & Services Campaign
General consensus from political community is that ballot measure will pass easily * These are Republican proposals and highly unlikely to be signed into law.
CONTRACTOR represents and warrants that CONTRACTOR is an independently established business entity formed as a [sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation], that customarily provides services of the same nature as the services provided for under this Agreement. CONTRACTOR represents and warrants that CONTRACTOR advertises these services to and contracts with entities other than . CONTRACTOR represents and warrants that CONTRACTOR maintains a separate business location and has all required business licenses and tax registration, if any, in order to perform services under this Agreement. 10
This Agreement between CONTRACTOR and ______ will constitute a valid and binding agreement between CONTRACTOR and ________ for non-exclusive services as a CONTRACTOR for __________ client. CONTRACTOR shall have the right to set his/her/its own hours and location of work, consistent with the nature of the services provided under this Agreement. CONTRACTOR shall determine the method, means and manner of performance of, but not limited to, such matters as outlined in Exhibit “A” without restriction by .___________is interested only in the results to be achieved from CONTRACTOR’S performance of the services CONTRACTOR shall provide his/her/its own resources and equipment and direct their operation in all respects when necessary to perform these services. Notwithstanding this Agreement, CONTRACTOR shall have the right to provide the same or similar services to entities other than without restriction. shall have no authority, control, or liability regarding CONTRACTOR’s performance or activities before or after each instance, wherein, CONTRACTOR may perform under this Agreement. The parties herein are and intend to remain independent parties. Nothing in this Agreement shall be deemed or construed to create the relationship of principal and agent, or of partnership or joint venture, and neither party shall hold itself out as an agent, legal representative, partner, subsidiary, joint venture, servant or employee of the other. CONRACTOR will at all times indemnify and hold ____, _______ and their respective agents, contractors and employees harmless from any and all claims, damages, liabilities and costs (including attorneys’ fees) arising out of any material breach by CONTRACTOR of any representation, warrant or agreement made by CONTRACTOR hereunder or arising out of CONTRACTOR’s services.
11
discretion, selection and expense, the employees, agents
services pursuant to this Agreement.
direction and control of the employees, agents and subcontractors and shall determine the method, means and manner of the performance of the work of its employees, agents and subcontractors based on the
12
Ann M. Grottveit Kahn, Soares & Conway, LLP agrottveit@kscsacramento.com www.ksclawyers.com
13