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Contractor or Employee? How California's AB5 Bill Will Impact Process Servers

AB5

What is AB5?

Assembly Bill 5 (AB5) is a bill that the California Senate passed on September 10, 2019 that redefines what it means to be an employee in California. It effectively codifies a previous decision made in the case, Dynamex Operations v. Superior Court into law. This 2018 decision held that Dynamex drivers were misclassified as contractors when they were doing the work of employees. To determine the amount of control that the workers had over their performance, the Supreme Court applied the ABC test which will be applied under the AB5 bill to determine the employment status of a worker.

The ABC test:

  • (a) that the worker is free from the control and direction of the hirer connected with the work performance, both under the contract for the performance of the work and in fact; and
  • (b) that the worker performs work that is outside the usual course of the hiring entity’s business; and
  • (c) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Assemblywoman Lorena Gonzalez brought the bill to the California State Assembly in January 2019. The bill was largely in response to big players in the gig economy, such as Uber, Lyft, and DoorDash, whose workers were not treated as employees. Rather, control belonged entirely to these companies who could fire workers at any time and force them to pay work-related expenses, such as gas and vehicle upkeep. The bill passed in a 29 to 11 vote in the State Senate but still requires another pass in the Assembly as well as a sign-off from Governor Gavin Newsom, who shows positive interest in the bill. If passed, AB5 will take effect on January 1, 2020.

AB5’s Effect on Process Servers

Many have praised AB5 because it takes away the power from companies like Uber, Lyft, and DoorDash and puts it back into workers’ hands. Protests by driver groups have expressed frustration with how these companies treat their contractors, taking advantage of their power while workers are often forced to work multiple jobs. AB5 will consider the workers as employees by law and therefore they will receive the title’s benefits and protections.

However, not all reactions to the bill have been positive and this is largely because the legislation will not just impact Uber, Lyft, and DoorDash drivers. AB5 will also affect independent truckers, healthcare providers, adult entertainers, psych therapists, and many other workers who are scrambling to get exemptions from the bill. Process servers are included in this list.

For more information:

For more information on the difference between employees and contractors, check out ServeManager's Pro Series webinars on the subject.

For companies that rely on freelancers and contractors, this bill might make their business models significantly more complicated and expensive. The complexities of individual industries and their needs will make enforcement of the bill a challenge as one sweeping solution will likely not achieve its intended goal for all businesses and the workers it is meant to benefit. Some workers actually prefer the flexibility and control afforded by contract work. Small businesses also benefit from the option of hiring contractors.

CALSPro

For California process servers concerned about AB5, there is still hope and support. The California Association of Legal Support Professionals (CALSPro) is doing everything they can to ensure California process server’s voices are heard. CALSPro President, Robert Porambo, said, “CALSPro has been actively monitoring the Dynamex ruling since April 2018 and has been working diligently on including a process server exemption. We will continue to monitor this situation on any new developments as they arise.” Likewise, CALSPro Director and Legislative Committee Chairman expanded on the bill saying, “AB5 is a once in a lifetime bill and completely changes the relationship between businesses and independent contractors in California. CALSPro worked relentlessly to add our industry to the list of exempted businesses, but unfortunately, it couldn’t be done before the bill was signed by the Governor. Rest assured, this is our top priority for the next legislative session.”

AB5 is a once in a lifetime bill and completely changes the relationship between businesses and independent contractors in California. Rest assured, this is our top priority for the next legislative session." - Chad G. Barger CALSPro Director, Legislative Committee Chairman

Join the Discussion

Do you have any concerns about AB5 or any thoughts on whether this bill will influence other states to take similar actions? Share your experience by joining our groups on LinkedIn and Facebook or contact us.

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