California Bill Redefines Standards for Employment Status
Associations will be impacted if the bill passes
A groundbreaking labor bill is making its way through the California Senate that would redefine what it means to be an employee in the state. Passed by the California State Assembly in May, AB 5 would extend labor protections and employee benefits like healthcare, overtime and minimum wage to many workers formerly considered freelancers or independent contractors.
If the measure passes the Senate, nonprofits and associations that use freelancers in California may need to reclassify these workers as full-time employees entitled to employee benefits. This would apply not just to associations headquartered in California, but any U.S. association that employs contractors in California.
The legislation was written by Assemblywoman Lorena Gonzalez, who is a labor advocate and a candidate for California Secretary of State in 2022. Gonzalez said she wants to codify a 2018 state Supreme Court ruling that said contract workers at delivery company Dynamex were entitled to the benefits of regular employees. The court decision created the “ABC” test to help classify workers in California.
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