SB 806 would repeal AB 5 (Gonzalez, 2019) and replace it with a new broad, flexible and workable ABC test for determining independent contractor status, a test which supports more worker freedom while saving business to business relationship opportunities.
Unlike AB 5’s strict, inflexible and extremely difficult to meet ABC test, which revokes freelancing opportunities and the ability to earn a living for millions of freelancers, the new ABC test in SB 806 would significantly expand independent contracting opportunities by allowing freelancers to continue to work as independent contractors as long as they comply with a simple and easier to meet ABC test. Under SB 806, freelancers would only have to meet the A factor (control) and either a more flexible B factor (work done either outside usual course of business or outside place of business or work done where the worker bears the costs of the workplace) or the C factor (work done by an independently established trade, occupation, or business).
On April 30, 2018, the California Supreme Court issued a landmark decision in Dynamex Operations W. v. Superior Court, (2018) 4 Cal.5th 903 by overturning 29 years of precedence for determining independent contractor status that had been established by S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
The decision created a new, one-size-fits-all and far more restrictive ABC test for determining independent contractor status. This test consists of just three factors, of which all must be met in order for an individual to work as an independent contractor. Under this ABC test a worker must: A) Be free from control and direction in the performance of services; and, B) Be performing work outside the usual course of the business of the hiring company; and, C) Be customarily engaged in an independently established trade, occupation, or business.
SB 806 will protect the livelihoods of the million freelancers whose opportunities to earn a living have been endangered by the Dynamex decision and AB 5. SB 806 is intended to allow any industry, profession, or business that had legally and appropriately enjoyed independent contractor relationships prior to the Dynamex decision and AB 5 to continue to do so.
Rather than eliminating choice and economic freedom as AB 5 does, SB 806 addresses the Dynamex decision in a manner that promotes economic freedom and the right to earn a living in a way that accurately reflect today’s economic and work life balance realities. It would also allow hard working Californians to be independent contractors again. As such, they will no longer have to worry about the government forcing them to become employees.
If California is really the land of opportunity, the Legislature needs to protect workers’ rights and freedoms to ensure all individuals desiring to be independent contractors, where freelancing is appropriate, have the ability to become freelance workers again.