Fenwick litigation and employment practices partner Sheeva Ghassemi-Vanni talked to Law360 about Assembly Bill 5, California’s newly-passed employee classification law, and how it could change the way businesses operate.
The law was passed in the wake of the California Supreme Court’s landmark Dynamex decision and imposes an “ABC” test on employers to determine whether a worker is an independent contractor or employee.
Ghassemi-Vanni commented that even though AB 5 will lead businesses to reclassify many people who are currently contractors as employees, that doesn't mean they will be classified as full-time employees. Companies could begin hiring temporary workers and part-time employees for short-term help or to fill a few hours per week.
"People generally think there are two flavors of workers — employee and contractor," Ghassemi-Vanni said. "I think what they forget is within 'employee,' there are other classifications that can cover somebody that a business may need for a short period of time."
Ghassemi-Vanni also stated that even if workers are classified as temps or part-time employees, employers must still obey the state’s labor laws and pay their business expenses. However, there can be savings related to items like health insurance, something she said is "one of the attractive things in making someone a contractor."
Ghassemi-Vanni commented that the passage of AB 5 could present a prime opportunity for the creation of a third worker classification that falls between an employee and a contractor, which could be a good option for gig economy workers.
The full article is available on Law360 (subscription required).