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How Coronavirus Is Impacting the Fight Over AB5

How Coronavirus Is Impacting the Fight Over AB5

Gig economy workers are more important than ever.

How Coronavirus Is Impacting the Fight Over AB5

In 2019, California passed Assembly Bill 5 (AB5). This law codifies a test that was adopted by the California Supreme Court, the ABC Test. In essence, it serves to ensure that companies cannot misclassify employees as independent contractors in order to avoid paying them benefits. AB5 went into effect in January 2020.

Massive corporations like Uber, Instacart and Lyft are strongly opposed to this law. According to a California employment lawyer, these companies and others (including trucking companies) have filed lawsuits against the state, seeking to prevent it from being implemented. Uber, Lyft and other corporations are also pushing a ballot measure for November 2020 that would give them an exemption from complying with the bill.

The battle over AB5 was already heated — and now the coronavirus pandemic has pushed this battle front and center. Gig economy workers, particularly those who deliver groceries and other goods, are more important than ever due to shelter-in-place orders. The companies who rely on these workers, like DoorDash, are now offering benefits that would typically be considered employee benefits. Many companies are now offering paid sick leave and pay increases in order to reduce the financial impact of COVID-19.

As a California employment lawyer can explain, this complicates the fight over AB5. It is difficult for a corporation to offer benefits like sick leave to workers while still claiming that these same people are not actually employees. Many of these same companies have argued that their workers should be eligible for unemployment benefits. Under the federal stimulus package, the CARES Act, independent contractors can apply for unemployment. Typically, these benefits are funded by employers paying into a state program through payroll taxes that are withheld from employees’ paychecks.

Corporations like Uber Eats and Postmates are hiring thousands of new workers to handle the sharp increase in online shopping and delivery requests during the coronavirus. These individuals are putting themselves at risk when shopping for and delivering items to customers across the state, all while contributing to the businesses’ profits — yet the companies that they work for don’t want them to be considered employees.

Companies who have offered paid sick leave to these workers have generally limited this leave to people who have been diagnosed with COVID-19 or are under orders to self-quarantine due to exposure to a person who has been diagnosed with the virus. As a California employment lawyer can explain, this does not protect workers who may suffer from a range of other illnesses — and likely won’t be offered beyond the pandemic. By contrast, AB5 would extend the same sick leave protection to employees who have been misclassified as independent contractors as all California employees receive.

It is difficult to know how the coronavirus will affect AB5 in the long-term. As it currently stands, most workers (other than independent owner-operator truck drivers) who are misclassified as independent contractors are entitled to standard employee benefits under this law. This includes unemployment insurance, the protection of wage and hour laws, and paid sick leave.

If you are working as an independent contractor and believe that you should be considered an employee, PLBSH can help. Our firm is dedicated to protecting the interests of workers throughout California. Contact us today at (800) 435-7542 or info@plbsh.com to schedule a consultation with an experienced California employment lawyer.

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