The controversial California Assembly Bill 5 aka AB 5 threatens to disrupt the gig economy as it directs employers to classify independent contractors as employees.
In order to determine if a person qualifies as an independent contractor, Companies must utilize an "ABC Test" with the following criteria:
(A) Person must be free from the control and direction of the company in performing work, both practically and in the contractual agreement between the parties
(B) Person must perform work that is outside the usual course of the company’s business; and
(C) Person should be consistently engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company
Note: On January 8th a Los Angeles County Superior Court judge ruled that AB 5 does not apply to owner operator truck drivers. The City of Los Angeles plans to appeal this ruling, we’ll keep you posted as things progress.