In addition to the Dynamex ruling handed down by the California Supreme Court in 2018 (and the related fallout, including the passage of Assembly Bill 5 (AB5), Assembly Bill 2257, and the passage of Proposition 22 to exempt ride-sharing services such as Uber and Lyft from the new employee classification test), California employers are more than ever being impacted by California’s highest court. Here are four cases currently pending before the California Supreme Court that employers should keep an eye on.
What the Repeal of AB5 and Enactment of AB2257 Means for California Employers
By now, most California employers are familiar with the new California “ABC test” to determine if workers are employees or independent contractors. This ABC test was first introduced in April 28, 2018, when the California Supreme Court issued its decision in Dynamex Operations West, Inc. v. Superior Court 4 Cal.5th 903 (2018) (“Dynamex”), which changed from the Borrello multi-factor test to the ABC test for employee classification under the California wage orders adopted by California’s Industrial Welfare Commission (“IWC”) that regulate the wages, hours, and working conditions of certain industries and occupations. In September 2019, Governor Newsom signed into law what was known as Assembly Bill 5 (“AB5”), which codified the Dynamex decision, expanded the ABC test to all provisions of the California Labor Code, Unemployment Insurance Code, and Wage Order claims, and added in a number of different industry-based exemptions. AB5 became effective on January 1, 2020 as Labor Code Section 2750.3, and since that time employers across the state have been scrambling to restructure their businesses to comply.
