California AB 2257: Provides much Needed Clarification for Process Serving Agencies
AB 2257 was signed by Governor Newsom late last week and became effective immediately. Since AB 5 was signed into law in California, the “gig economy” and others that had been classified as independent contractors have been seeking clarity: who is an employee and who can remain an independent contractor?
AB 5 essentially codified into law a previous decision made in the case Dynamex Operations v. Superior Court. The goal of AB 5 was to protect workers from misclassification as employees or contractors by using the ABC test. While the bill took power from larger companies like Uber, Lyft, and DoorDash and placed it into the hands of their workers, it was controversial in that it also impacted other industries such as truckers, musicians, and even process servers. For companies that relied on freelancers and contractors, this bill made their business models significantly more complicated and expensive.
AB 2257 modifies portions of AB 5 in a way that exempts more occupations and is otherwise friendlier, specifically as it relates to bona fide business-to-business contracting relationships otherwise known as a “business service provider” contracts. The determination of employee or contractor status of a business service provider shall be governed by Borello if the contracting business demonstrates that they satisfy all of the Borello criteria. See Borello for the test/requirements.
In regards to how the bill will affect process servers, Jeff Karotkin, industry veteran and owner and operator of FileServeX, stated, “As it relates to Process Serving agencies it appears to me that there is now a more reasonable path forward coming into compliance of AB 5 short of converting all IC’s to employees. I suggest you read the bill yourself and seek legal advice before rolling out your own compliance plan.”
Editor's note: The title of this article was changed from its original title in order to more accurately reflect AB 2257's impact on process servers.