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California passes major employment law overhaul

California lawmakers have passed Assembly Bill 5, a measure that reporters are already saying will overhaul the landscape of employment law in this state. The measure now awaits the signature of the Governor. The Governor has been supportive of this Bill.

The law will codify a recent decision by the California Supreme Court, which makes it very difficult for companies in this state to classify their workers as independent contractors. Some of the most famous companies that use this model include so-called platform-based companies, like Uber, Lyft and companies that connect drivers with those who need food or packages delivered. They are not exempt from the provisions of Assembly Bill 5, although some other trades and professions are.

The upshot of this Bill goes to the heart of what is frequently a controversy in the world of employment law. Independent contractors do not get the benefit of overtime, minimum wage protections and the like, as they are, in theory, paid by the job. As a result, an independent contractor may have a much harder time making a claim for unpaid wages or for the denial of other benefits guaranteed to "employees" in California.

The Bill also put some additional strict provisions behind the law by giving cities and the state the right to sue employers directly for misclassifying workers as independent contractors instead of employees. Among other things, this enforcement mechanism means that employers in this state cannot force an employee's misclassification claim into arbitration, a process which critics say favors employers.

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