Governor Newsom has recently signed a new bill known as AB 2257. To many workers this new bill is regarded as a crucial piece of legislation as it amends a previous controversial bill that required many independent contractors to become employees of their clients. This new amendment bill changed that requirement by expanding exemptions, which allows those workers turned into employees to return as independent contractor.
The previous controversial bill in question is known as the AB 5 legislation, which stirred up a lot of opposition ever since it was adopted last year. This legislation essentially changed the requirements for how the state of California classifies workers into independent contractors and into W-2 employees. As a result of these new requirements many workers lost their classification as independent contractors and were required to become employees.
AB 5 originated from Assemblywoman Lorena Gonzalez, D-San Diego, in an effort to comply with the 2018 state supreme court ruling in Dynamex Operations West, Inc v Superior Court. This supreme court ruling allowed workers to be classified as employees instead of independent contractors, entitling them to benefits and other perks like minimum wage, overtime pay, unemployment insurance and health benefits.
Since AB 5 millions of workers were reclassified from independent contractors to W-2 employees. Yet, this massive change for many former independent contractors came as an upsetting shock. It was also not appreciated by the businesses who now had to treat their previous contractors as employees.
Specifically, many independent contractors believed that AB 5 held too many unwise restrictions. For instance, under AB5 freelance writers were blocked from accepting more than 35 assignments from a single outlet. Moreover, musicians found that they could not return to play regular gigs at venues. It also caused problems for businesses, who out of fear of being potentially liable for retroactive fees and fines, decided to abstain from utilizing California-based freelancers.
However, ever since the recent passing of AB 2257, the problems mentioned above have been addressed. AB 2257 goes on to give exemptions to freelance writers and musicians, thus, allowing them to continue working as independent contractors. This means that freelance writers no longer have a 35-submission cap and musicians can return to play regular gigs at the same venue.
Furthermore, these exemptions also go on to cover graphic designers, travel agents, marketers, translators, appraisers, and registered foresters. Besides musicians other workers in the music industry are now also exempt like songwriters, producers, promoters and many other.
Assemblywoman Lorena Gonzalez goes on to comment that “This bill strikes a balance and continues to provide protections for workers against misclassification that had previously gone unchecked for decades under the old rules.” Many independent contractors agree with the assemblywoman and are satisfied with the new amendments that AB 2257 has brought.
However, these new amendments did not exempt everyone, and one significant business that has been very vocal in their opposition for not being exempt are the app-based companies like Uber and Lyft. To show their opposition the companies have banned together to launch a $110 million political campaign to sway voters to pass Proposition 22 which would reclassify their drivers as independent contractors.
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