Updated: Jul 17, 2019
WASHINGTON, D.C. -- Last Monday, the California General Assembly opened its long-anticipated pre-filing period, allowing politicians to draw their battle lines around arguably the most economically consequential issue this session: the fate of Dynamex and the “ABC test.” The two feuding camps –labor and business– have had little to do but wring their hands and scheme since late last April when the Los Angeles Supreme Court handed down the decision on worker misclassification, scraping the Borello test in favor for a stricter threshold for defining who is an independent contractor.
Leading the labor movement on Monday, Assemblywoman Lorena Gonzalez Fletcher (D-San Diego) introduced Assembly Bill 5, which would codify Dynamex in state law and “clarify the decision’s application.” Politically, the introduction of AB 5 seeks to set the table for the coming debate around Dynamex while reminding business leaders what’s at stake if their do not cooperate. Team labor is depending on political support from the “super-duper” Democratic majority in both chambers as well as the Governor’s mansion.
The business community’s strategy up until now has been to stick together instead of diving for industry-specific concessions. But in a statement about AB 5, the California Labor Federation said that they are “open to incorporating changes in the bill that clear up the intent and the applications of the ABC test,” and adding that “there could even be industries with unique employment models that are exempted.” Are these overtures an olive branch or part of a divide-and-conquer strategy? We shall see.
Assemblywoman Melissa Melendez (R-Lake Elsinore) introduced the business community’s placeholder in Assembly Bill 71, which would replace the “ABC test” with its predecessor, the Borello test.
As we’ve written in the past, Dynamex would upend the business model of the Language Service Companies, which provide employment to thousands of skills-based contractors, and would open up the floodgates to retroactive non-compliance litigation. Experts have estimated that up to 300,000 independent contractors may be re-classified as full-time workers in California alone.
Governor-Elect Gavin Newsom may be business’ best bet when it comes to reaching a compromise on Dynamex. Perhaps to the chagrin of labor leaders, Governor-Elect Newsom is a small business owner, and openly touts the need for “portable benefits” and the “future workforce” on his campaign website. On top of that, many have suggested a president run is in his future, which may further incentive him to attempt to appeal to moderates and bridge the gap between business and labor.
Indeed, the Dynamex debate in California will provide national pollsters with fertile ground to witness voters’ appetite and opinions about the future of the gig economy and how it ought to be regulated or not. “Gig economy,” “portable benefits” and “future workforce” are quickly becoming buzzwords that look to collide with the trajectory of dozens of presidential candidates’ platforms in 2020. Senator Bernie Sanders (I-Vt) made expanding the definition of an employee a part of his political platform (see the Workplace Democracy Act, which was introduced a week after Dynamex. Coincidence? We think not).
The implication that Dynamex will have on the national stage is why now –at this very moment– every business owner in California is currently reviewing their practices with legal counsel to ensure compliance with current law. Ignorance of the law and its application does not make one immune to its enforcement. The Association of Language Companies (ALC), a member of the California Chamber of Commerce’s I’m Independent Coalition, is hosting a forum as part of their annual UnConference in Huntington Beach, California, January 17-19, 2019 with language policy experts from Sacramento to Washington, DC, to discuss what Dynamex and the next legislative session means for the Language Services Industry. Learn more about participating here.
This information is not intended to serve as legal advice. JNCL-NCLIS does not provide legal services or legal advice. Language Service Companies and others are encouraged to consult a lawyer to interpret and apply this information to a particular circumstance.