California Assembly Bill 5

But, uh, how did this all come about?

Well, back in 2020, if you remember, um, they codified, uh, Dynamex, which was the court case that says, "Hey, if a company has this much control over you and it's their brand and it's not really an independent contracting gig, and you actually are due all of the, you know, rights of every other worker in California, minimum wage, expenses reimbursed, blah blah blah," when that was codified into AB5 and nothing changed for drivers, in fact our pay kept going, getting lower, uh, we said, "Well, this is enough.

We have to enforce it as the drivers," and we did the People's Enforcement Campaign.

Thousands and thousands of drivers, um, filed wage claims through RDU's, um, campaign and, um, with the California Labor Commission.

I can fully understand that.

Um, I mean, for folks who just say, "This is only California, always California," I mean, this is not California, because this, there has been a settlement in New York State, there has been a settlement in Massachusetts, um, settlement, you know, in California now.

But then we have something called Prop 22 in California, where after ignoring AB5 completely, for a whole year, actually, um, Uber and Lyft, you know, and DoorDash and all these companies spent 220 million to pass something called Prop 22.

And, uh, which is absolute disaster in my opinion, I mean, it's just, it's horrible.

But we have let this government become so big that the industries step in occasionally but only tactically.

We saw this with, uh, 2022, was it, when Uber, Lyft, and DoorDash had to fight off Assembly Bill 5? You know, I, I was talking to their representatives and saying like, "Open this up.

There are small business people out there who are being destroyed by AB 5," and they said, "Not our fight." That's how business people too often think about this.

They think very...

To those that still think like, well, it wasn't, you know, and to the people who always say, yeah, Prop 22 is horrible.

It is horrible, but that's not the real, that's not the root of AB5.

AB5 wiped out people, not just gig workers, everybody.

And, um, Kim is in New Jersey.

So we're going to get into what is going on in New Jersey because it's a big deal.

Only the interpretation of a keyword in the law has changed.

That's what the state of New Jersey just did.

They came in and what happened on October 1st is their interpretation of of this ABC test that is at the heart of California's AB5, their interpretation took effect.

To rebut that presumption, the hiring company must show the worker is free from its control and direction, performs work outside the usual course of the company's business, and is customarily engaged in an independently established trade of the same nature as the work performed.

The legislature codified this standard, known as the ABC test, at Labor Code Section 2775 through Assembly Bill 5 in two thousand nineteen, with exemptions for specified occupations and bona fide business-to-business contracting relationships.

Proposition 22, approved by California voters in November two thousand twenty, exempted app-based transportation network and delivery network drivers from the ABC test entirely in exchange for a net earnings floor, a health insurance stipend tied to hours worked, and occupational accident insurance.

The California Supreme Court upheld Proposition 22 constitutionality in Castellanos v.

It's almost impossible to pass.

Look, this is just California's AB5 with a different zip code.

Bottom line, it's a play to force the industry toward a W2 model, which just adds a ton of overhead.

It's like trying to run a blitz with no one in the pocket.

That was where I started off.

And there's so many bills that I absolutely can't stand, which is AB5.

I'll talk about this often.

But AB5 was the Uber bill, if you will, the one that reclassified Uber and Lyft drivers and kind of the gig economy and made people W2 employees, to which I used to do certain side hustles Just to not be an employee so that I could be a 1099.

And as an independent contractor, there's a whole lot more things that you can

do

So let me just go over the structural point quickly here about the ABC test and what makes it so hard for employers to comply with this.

Under Dynamex and now codified labor code by AB5, every employer is presumed to be an employee.

The hiring entity bears the burden of proving independent contractor status, and it has to satisfy all three prongs of the ABC test.

Missed prong, the worker is an employee and it's not a balancing test.