California 2019-2020 Regular Session

California Senate Bill SB238 Compare Versions

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1		-	~~Amended IN Senate March 28, 2019~~ CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 238Introduced by Senator ~~Grove(Coauthors: Senators Bates, Borgeas, Chang, Jones, Moorlach, Morrell, Nielsen, Stone, and Wilk)February~~ 11, 2019 An act to amend Section 2750.5 of ~~add Section 2750.2 to~~ the Labor Code, relating to employment.LEGISLATIVE COUNSEL'S DIGESTSB 238, as ~~amended~~, Grove. Employment relations. Worker status: factors for determination of employee status.Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee. Existing law requires a 3-part test, commonly known as the ABC test, to establish that a worker is an independent contractor for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. This bill would instead, for purposes of claims for wages and benefits arising under wage orders, analyze whether the worker is economically dependent upon the hiring entity to determine whether that worker is an employee based upon the economic reality of the relationship with the hiring entity. The bill would require this analysis to be based solely upon enumerated factors that are similar to those used as a part of the Economic Realities Test in the federal Fair Labor Standards Act of 1938. This bill would provide legislative findings and declarations in support of these provisions, and would state in the findings and declarations that it is the intent of the Legislature that the test under these provisions be applied retroactively to claims filed on and after April 30, 2018.Existing law provides a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required under the Contractors State License Law, or performing services for a person who is required to obtain that license, is an employee, rather than an independent contractor, and specifies factors to establish proof of independent contractor status.This bill would make nonsubstantive changes to these provisions.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: ~~NOYES~~ Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) On April 30, 2018, the California Supreme Court issued a landmark decision in Dynamex Operations W. v. Superior Court, (2018) 4 Cal.5th 903 by overturning 29 years of precedence established in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.(b) The decision replaces the multifactor test for determining employment status from the Borello case with the ABC test, a one-size-fits-all and far more restrictive test consisting of just three factors, of which all must be met in order for an individual to be classified as an independent contractor.(c) The decision puts the livelihood of nearly 2,000,000 Californians who choose to work as independent contractors at risk.(d) The decision eliminates the choice that more and more Californians are making for their work and quality of life.(e) The decision moves the state backwards and does not accurately reflect todays realities, including the changing demands of the modern workplace.(f) Prior to this decision, the ABC test never existed in California law or regulation.(g) Such a momentous policy change should not be made by judicial fiat; instead, it should be made by the Legislature.(h) The federal Fair Labor Standards Act 1938 (FLSA) provides a good model for determining employment status, as it is flexible enough to reflect todays realities and modern workplace demands while also protecting the rights of workers.(i) Conforming Californias law for determining employment status to the FLSA will also simplify compliance for employers and workers who will no longer have to navigate two different sets of rules.(j) It is the intent of the Legislature to conform Californias test for determining employment status for purposes of wage orders to the test established by the federal Fair Labor Standards Act.(k) It is the intent of the Legislature that this test for determining employment status for purposes of wage orders shall be interpreted to apply in California as it is applied under the federal Fair Labor Standards Act, including an emphasis on the degree of control and the specification that no one factor controls, but rather the totality of the circumstances.(l) It is also the intent of the Legislature that this test will be effective for all claims filed on and after April 30, 2018.SEC. 2. Section 2750.2 is added to the Labor Code, to read:2750.2. For purposes of the wage orders under the provisions of this code and the wage orders of the Industrial Welfare Commission, the determination of whether a person providing labor or services for remuneration is considered an employee shall be based upon an analysis of whether that person is economically dependent upon the hiring entity. This analysis shall be based upon the economic reality of the workers relationship with the hiring entity by considering only the following six factors:(a) The nature and degree of control by the principal.(b) The workers opportunities for profit and loss.(c) The amount of the workers investment in facilities and equipment.(d) The permanency of the relationship.(e) The required skill necessary for success.(f) The extent to which the services rendered are an integral part of the principals business.SECTION 1.Section 2750.5 of the Labor Code is amended to read:2750.5.(a)There is a rebuttable presumption affecting the burden of proof that an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:(1)That the individual has the right to control, and discretion as to the manner of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.(2)That the individual is customarily engaged in an independently established business.(3)That the individuals independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principals work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract.(b)In addition to the factors contained in paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status.(c)For purposes of workers compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.
	1	+	CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 238Introduced by Senator GroveFebruary 11, 2019 An act to amend Section 2750.5 of the Labor Code, relating to employment.LEGISLATIVE COUNSEL'S DIGESTSB 238, as introduced, Grove. Employment relations.Existing law provides a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required under the Contractors State License Law, or performing services for a person who is required to obtain that license, is an employee, rather than an independent contractor, and specifies factors to establish proof of independent contractor status.This bill would make nonsubstantive changes to these provisions.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 2750.5 of the Labor Code is amended to read:2750.5. (a) There is a rebuttable presumption affecting the burden of proof that a worker an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:(a)(1) That the individual has the right to control control, and discretion as to the manner of of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.(b)(2) That the individual is customarily engaged in an independently established business.(c)(3) That the individuals independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principals work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract. In(b) In addition to the factors contained in subdivisions (a), (b), and (c), any paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status. For(c) For purposes of workers compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.
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3		-	~~Amended IN Senate March 28, 2019~~ CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 238Introduced by Senator ~~Grove(Coauthors: Senators Bates, Borgeas, Chang, Jones, Moorlach, Morrell, Nielsen, Stone, and Wilk)February~~ 11, 2019 An act to amend Section 2750.5 of ~~add Section 2750.2 to~~ the Labor Code, relating to employment.LEGISLATIVE COUNSEL'S DIGESTSB 238, as ~~amended~~, Grove. Employment relations. Worker status: factors for determination of employee status.Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee. Existing law requires a 3-part test, commonly known as the ABC test, to establish that a worker is an independent contractor for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. This bill would instead, for purposes of claims for wages and benefits arising under wage orders, analyze whether the worker is economically dependent upon the hiring entity to determine whether that worker is an employee based upon the economic reality of the relationship with the hiring entity. The bill would require this analysis to be based solely upon enumerated factors that are similar to those used as a part of the Economic Realities Test in the federal Fair Labor Standards Act of 1938. This bill would provide legislative findings and declarations in support of these provisions, and would state in the findings and declarations that it is the intent of the Legislature that the test under these provisions be applied retroactively to claims filed on and after April 30, 2018.Existing law provides a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required under the Contractors State License Law, or performing services for a person who is required to obtain that license, is an employee, rather than an independent contractor, and specifies factors to establish proof of independent contractor status.This bill would make nonsubstantive changes to these provisions.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: ~~NOYES~~ Local Program: NO
	3	+	CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 238Introduced by Senator GroveFebruary 11, 2019 An act to amend Section 2750.5 of the Labor Code, relating to employment.LEGISLATIVE COUNSEL'S DIGESTSB 238, as introduced, Grove. Employment relations.Existing law provides a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required under the Contractors State License Law, or performing services for a person who is required to obtain that license, is an employee, rather than an independent contractor, and specifies factors to establish proof of independent contractor status.This bill would make nonsubstantive changes to these provisions.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO
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5		-	Amended IN Senate March 28, 2019
6	5
7		-	Amended IN Senate March 28, 2019
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	7	+
8	8
9	9		CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION
10	10
11	11		Senate Bill No. 238
12	12
13		-	Introduced by Senator ~~Grove(Coauthors: Senators Bates, Borgeas, Chang, Jones, Moorlach, Morrell, Nielsen, Stone, and Wilk)February~~ 11, 2019
	13	+	Introduced by Senator GroveFebruary 11, 2019
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15		-	Introduced by Senator Grove~~(Coauthors: Senators Bates, Borgeas, Chang, Jones, Moorlach, Morrell, Nielsen, Stone, and Wilk)~~
	15	+	Introduced by Senator Grove
16	16		February 11, 2019
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18		-	An act to amend Section 2750.5 of ~~add Section 2750.2 to~~ the Labor Code, relating to employment.
	18	+	An act to amend Section 2750.5 of the Labor Code, relating to employment.
19	19
20	20		LEGISLATIVE COUNSEL'S DIGEST
21	21
22	22		## LEGISLATIVE COUNSEL'S DIGEST
23	23
24		-	SB 238, as ~~amended~~, Grove. Employment relations. ~~Worker status: factors for determination of employee status.~~
	24	+	SB 238, as introduced, Grove. Employment relations.
25	25
26		-	Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee. Existing law requires a 3-part test, commonly known as the ABC test, to establish that a worker is an independent contractor for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. This bill would instead, for purposes of claims for wages and benefits arising under wage orders, analyze whether the worker is economically dependent upon the hiring entity to determine whether that worker is an employee based upon the economic reality of the relationship with the hiring entity. The bill would require this analysis to be based solely upon enumerated factors that are similar to those used as a part of the Economic Realities Test in the federal Fair Labor Standards Act of 1938. This bill would provide legislative findings and declarations in support of these provisions, and would state in the findings and declarations that it is the intent of the Legislature that the test under these provisions be applied retroactively to claims filed on and after April 30, 2018.Existing law provides a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required under the Contractors State License Law, or performing services for a person who is required to obtain that license, is an employee, rather than an independent contractor, and specifies factors to establish proof of independent contractor status.This bill would make nonsubstantive changes to these provisions.
27		-
28		-	Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee. Existing law requires a 3-part test, commonly known as the ABC test, to establish that a worker is an independent contractor for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission.
29		-
30		-	This bill would instead, for purposes of claims for wages and benefits arising under wage orders, analyze whether the worker is economically dependent upon the hiring entity to determine whether that worker is an employee based upon the economic reality of the relationship with the hiring entity. The bill would require this analysis to be based solely upon enumerated factors that are similar to those used as a part of the Economic Realities Test in the federal Fair Labor Standards Act of 1938. This bill would provide legislative findings and declarations in support of these provisions, and would state in the findings and declarations that it is the intent of the Legislature that the test under these provisions be applied retroactively to claims filed on and after April 30, 2018.
	26	+	Existing law provides a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required under the Contractors State License Law, or performing services for a person who is required to obtain that license, is an employee, rather than an independent contractor, and specifies factors to establish proof of independent contractor status.This bill would make nonsubstantive changes to these provisions.
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32	28		Existing law provides a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required under the Contractors State License Law, or performing services for a person who is required to obtain that license, is an employee, rather than an independent contractor, and specifies factors to establish proof of independent contractor status.
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34		-
35		-
36	30		This bill would make nonsubstantive changes to these provisions.
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38		-
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40	32		## Digest Key
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42	34		## Bill Text
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44		-	The people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) On April 30, 2018, the California Supreme Court issued a landmark decision in Dynamex Operations W. v. Superior Court, (2018) 4 Cal.5th 903 by overturning 29 years of precedence established in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.(b) The decision replaces the multifactor test for determining employment status from the Borello case with the ABC test, a one-size-fits-all and far more restrictive test consisting of just three factors, of which all must be met in order for an individual to be classified as an independent contractor.(c) The decision puts the livelihood of nearly 2,000,000 Californians who choose to work as independent contractors at risk.(d) The decision eliminates the choice that more and more Californians are making for their work and quality of life.(e) The decision moves the state backwards and does not accurately reflect todays realities, including the changing demands of the modern workplace.(f) Prior to this decision, the ABC test never existed in California law or regulation.(g) Such a momentous policy change should not be made by judicial fiat; instead, it should be made by the Legislature.(h) The federal Fair Labor Standards Act 1938 (FLSA) provides a good model for determining employment status, as it is flexible enough to reflect todays realities and modern workplace demands while also protecting the rights of workers.(i) Conforming Californias law for determining employment status to the FLSA will also simplify compliance for employers and workers who will no longer have to navigate two different sets of rules.(j) It is the intent of the Legislature to conform Californias test for determining employment status for purposes of wage orders to the test established by the federal Fair Labor Standards Act.(k) It is the intent of the Legislature that this test for determining employment status for purposes of wage orders shall be interpreted to apply in California as it is applied under the federal Fair Labor Standards Act, including an emphasis on the degree of control and the specification that no one factor controls, but rather the totality of the circumstances.(l) It is also the intent of the Legislature that this test will be effective for all claims filed on and after April 30, 2018.SEC. 2. Section 2750.2 is added to the Labor Code, to read:2750.2. For purposes of the wage orders under the provisions of this code and the wage orders of the Industrial Welfare Commission, the determination of whether a person providing labor or services for remuneration is considered an employee shall be based upon an analysis of whether that person is economically dependent upon the hiring entity. This analysis shall be based upon the economic reality of the workers relationship with the hiring entity by considering only the following six factors:(a) The nature and degree of control by the principal.(b) The workers opportunities for profit and loss.(c) The amount of the workers investment in facilities and equipment.(d) The permanency of the relationship.(e) The required skill necessary for success.(f) The extent to which the services rendered are an integral part of the principals business.SECTION 1.Section 2750.5 of the Labor Code is amended to read:2750.5.(a)There is a rebuttable presumption affecting the burden of proof that an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:(1)That the individual has the right to control, and discretion as to the manner of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.(2)That the individual is customarily engaged in an independently established business.(3)That the individuals independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principals work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract.(b)In addition to the factors contained in paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status.(c)For purposes of workers compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.
	36	+	The people of the State of California do enact as follows:SECTION 1. Section 2750.5 of the Labor Code is amended to read:2750.5. (a) There is a rebuttable presumption affecting the burden of proof that a worker an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:(a)(1) That the individual has the right to control control, and discretion as to the manner of of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.(b)(2) That the individual is customarily engaged in an independently established business.(c)(3) That the individuals independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principals work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract. In(b) In addition to the factors contained in subdivisions (a), (b), and (c), any paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status. For(c) For purposes of workers compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.
45	37
46	38		The people of the State of California do enact as follows:
47	39
48	40		## The people of the State of California do enact as follows:
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50		-	SECTION 1. ~~The Legislature finds and declares all~~ of the ~~following~~:(a) ~~On April 30,~~ ~~2018,~~ the ~~California Supreme Court issued~~ a landmark decision in Dynamex Operations W. v. Superior Court, (2018) 4 Cal.5th 903 by overturning 29 years of precedence established in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.(b) The decision replaces the multifactor test for determining employment status from the Borello case with the ABC test, a one-size-fits-all and far more restrictive test consisting of just three factors, of which all must be met in order for an individual to ~~be classified as~~ an independent contractor.(c) The ~~decision puts~~ the ~~livelihood~~ of ~~nearly 2,000,000 Californians who choose to work as independent contractors at risk.(d)~~ The ~~decision eliminates~~ the ~~choice that more and more Californians are making for their~~ work and ~~quality~~ of ~~life.(e)~~ The ~~decision moves~~ the ~~state backwards~~ and ~~does~~ not ~~accurately reflect todays realities, including~~ the ~~changing demands~~ of the ~~modern workplace.(f) Prior~~ to ~~this decision~~, the ~~ABC test never existed in California law or regulation.(g) Such a momentous policy change should not be made by judicial fiat; instead, it should be made~~ by the ~~Legislature.(h)~~ The ~~federal Fair Labor Standards Act 1938 (FLSA) provides a good model for determining employment~~ status, ~~as it~~ is ~~flexible enough~~ to ~~reflect todays realities and modern workplace demands while also protecting the rights~~ of ~~workers~~.(i) ~~Conforming Californias law for determining employment status~~ to the ~~FLSA will also simplify compliance~~ for ~~employers and workers who will no longer have~~ to ~~navigate two different sets~~ of ~~rules.(j) It is the intent~~ of the ~~Legislature to conform Californias test~~ for ~~determining employment status~~ for purposes of ~~wage orders~~ to the ~~test established by~~ the ~~federal Fair Labor Standards Act.(k) It is the intent~~ of ~~the Legislature that this test for determining employment status for purposes of wage orders shall be interpreted to apply in California as it is applied~~ under ~~the federal Fair Labor Standards Act, including an emphasis on the degree of control~~ and ~~the specification that no one factor controls, but rather the totality of the circumstances~~.~~(l) It is also the intent of the Legislature that this test will be effective for all claims filed on and after April 30, 2018.~~
	42	+	SECTION 1. Section 2750.5 of the Labor Code is amended to read:2750.5. (a) There is a rebuttable presumption affecting the burden of proof that a worker an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:(a)(1) That the individual has the right to control control, and discretion as to the manner of of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.(b)(2) That the individual is customarily engaged in an independently established business.(c)(3) That the individuals independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principals work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract. In(b) In addition to the factors contained in subdivisions (a), (b), and (c), any paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status. For(c) For purposes of workers compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.
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52		-	SECTION 1. The Legislature finds and declares all of the following:(a) On April 30, 2018, the California Supreme Court issued a landmark decision in Dynamex Operations W. v. Superior Court, (2018) 4 Cal.5th 903 by overturning 29 years of precedence established in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.(b) The decision replaces the multifactor test for determining employment status from the Borello case with the ABC test, a one-size-fits-all and far more restrictive test consisting of just three factors, of which all must be met in order for an individual to be classified as an independent contractor.(c) The decision puts the livelihood of nearly 2,000,000 Californians who choose to work as independent contractors at risk.(d) The decision eliminates the choice that more and more Californians are making for their work and quality of life.(e) The decision moves the state backwards and does not accurately reflect todays realities, including the changing demands of the modern workplace.(f) Prior to this decision, the ABC test never existed in California law or regulation.(g) Such a momentous policy change should not be made by judicial fiat; instead, it should be made by the Legislature.(h) The federal Fair Labor Standards Act 1938 (FLSA) provides a good model for determining employment status, as it is flexible enough to reflect todays realities and modern workplace demands while also protecting the rights of workers.(i) Conforming Californias law for determining employment status to the FLSA will also simplify compliance for employers and workers who will no longer have to navigate two different sets of rules.(j) It is the intent of the Legislature to conform Californias test for determining employment status for purposes of wage orders to the test established by the federal Fair Labor Standards Act.(k) It is the intent of the Legislature that this test for determining employment status for purposes of wage orders shall be interpreted to apply in California as it is applied under the federal Fair Labor Standards Act, including an emphasis on the degree of control and the specification that no one factor controls, but rather the totality of the circumstances.(l) It is also the intent of the Legislature that this test will be effective for all claims filed on and after April 30, 2018.
53		-
54		-	SECTION 1. The Legislature finds and declares all of the following:
	44	+	SECTION 1. Section 2750.5 of the Labor Code is amended to read:
55	45
56	46		### SECTION 1.
57	47
58		-	(a) ~~On April 30~~, ~~2018~~, the ~~California Supreme Court issued~~ a ~~landmark decision in Dynamex Operations W~~. ~~v. Superior Court~~, ~~(2018)~~ 4 ~~Cal~~.~~5th 903 by overturning 29 years of precedence established in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.~~
	48	+	2750.5. (a) There is a rebuttable presumption affecting the burden of proof that a worker an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:(a)(1) That the individual has the right to control control, and discretion as to the manner of of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.(b)(2) That the individual is customarily engaged in an independently established business.(c)(3) That the individuals independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principals work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract. In(b) In addition to the factors contained in subdivisions (a), (b), and (c), any paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status. For(c) For purposes of workers compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.
59	49
60		-	(b) The ~~decision replaces the multifactor test for determining employment status from the Borello case with the ABC test,~~ a ~~one-size-fits-all and far more restrictive test consisting of just three factors, of which all must be met in order for~~ an individual to ~~be classified as~~ an independent contractor.
	50	+	2750.5. (a) There is a rebuttable presumption affecting the burden of proof that a worker an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:(a)(1) That the individual has the right to control control, and discretion as to the manner of of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.(b)(2) That the individual is customarily engaged in an independently established business.(c)(3) That the individuals independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principals work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract. In(b) In addition to the factors contained in subdivisions (a), (b), and (c), any paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status. For(c) For purposes of workers compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.
61	51
62		-	(c) The decision puts the livelihood of nearly 2,000,000 Californians who choose to work as independent contractors at risk.
63		-
64		-	(d) The decision eliminates the choice that more and more Californians are making for their work and quality of life.
65		-
66		-	(e) The decision moves the state backwards and does not accurately reflect todays realities, including the changing demands of the modern workplace.
67		-
68		-	(f) Prior to this decision, the ABC test never existed in California law or regulation.
69		-
70		-	(g) Such a momentous policy change should not be made by judicial fiat; instead, it should be made by the Legislature.
71		-
72		-	(h) The federal Fair Labor Standards Act 1938 (FLSA) provides a good model for determining employment status, as it is flexible enough to reflect todays realities and modern workplace demands while also protecting the rights of workers.
73		-
74		-	(i) Conforming Californias law for determining employment status to the FLSA will also simplify compliance for employers and workers who will no longer have to navigate two different sets of rules.
75		-
76		-	(j) It is the intent of the Legislature to conform Californias test for determining employment status for purposes of wage orders to the test established by the federal Fair Labor Standards Act.
77		-
78		-	(k) It is the intent of the Legislature that this test for determining employment status for purposes of wage orders shall be interpreted to apply in California as it is applied under the federal Fair Labor Standards Act, including an emphasis on the degree of control and the specification that no one factor controls, but rather the totality of the circumstances.
79		-
80		-	(l) It is also the intent of the Legislature that this test will be effective for all claims filed on and after April 30, 2018.
81		-
82		-	SEC. 2. Section 2750.2 is added to the Labor Code, to read:2750.2. For purposes of the wage orders under the provisions of this code and the wage orders of the Industrial Welfare Commission, the determination of whether a person providing labor or services for remuneration is considered an employee shall be based upon an analysis of whether that person is economically dependent upon the hiring entity. This analysis shall be based upon the economic reality of the workers relationship with the hiring entity by considering only the following six factors:(a) The nature and degree of control by the principal.(b) The workers opportunities for profit and loss.(c) The amount of the workers investment in facilities and equipment.(d) The permanency of the relationship.(e) The required skill necessary for success.(f) The extent to which the services rendered are an integral part of the principals business.
83		-
84		-	SEC. 2. Section 2750.2 is added to the Labor Code, to read:
85		-
86		-	### SEC. 2.
87		-
88		-	2750.2. For purposes of the wage orders under the provisions of this code and the wage orders of the Industrial Welfare Commission, the determination of whether a person providing labor or services for remuneration is considered an employee shall be based upon an analysis of whether that person is economically dependent upon the hiring entity. This analysis shall be based upon the economic reality of the workers relationship with the hiring entity by considering only the following six factors:(a) The nature and degree of control by the principal.(b) The workers opportunities for profit and loss.(c) The amount of the workers investment in facilities and equipment.(d) The permanency of the relationship.(e) The required skill necessary for success.(f) The extent to which the services rendered are an integral part of the principals business.
89		-
90		-	2750.2. For purposes of the wage orders under the provisions of this code and the wage orders of the Industrial Welfare Commission, the determination of whether a person providing labor or services for remuneration is considered an employee shall be based upon an analysis of whether that person is economically dependent upon the hiring entity. This analysis shall be based upon the economic reality of the workers relationship with the hiring entity by considering only the following six factors:(a) The nature and degree of control by the principal.(b) The workers opportunities for profit and loss.(c) The amount of the workers investment in facilities and equipment.(d) The permanency of the relationship.(e) The required skill necessary for success.(f) The extent to which the services rendered are an integral part of the principals business.
91		-
92		-	2750.2. For purposes of the wage orders under the provisions of this code and the wage orders of the Industrial Welfare Commission, the determination of whether a person providing labor or services for remuneration is considered an employee shall be based upon an analysis of whether that person is economically dependent upon the hiring entity. This analysis shall be based upon the economic reality of the workers relationship with the hiring entity by considering only the following six factors:(a) The nature and degree of control by the principal.(b) The workers opportunities for profit and loss.(c) The amount of the workers investment in facilities and equipment.(d) The permanency of the relationship.(e) The required skill necessary for success.(f) The extent to which the services rendered are an integral part of the principals business.
	52	+	2750.5. (a) There is a rebuttable presumption affecting the burden of proof that a worker an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:(a)(1) That the individual has the right to control control, and discretion as to the manner of of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.(b)(2) That the individual is customarily engaged in an independently established business.(c)(3) That the individuals independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principals work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract. In(b) In addition to the factors contained in subdivisions (a), (b), and (c), any paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status. For(c) For purposes of workers compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.
93	53
94	54
95	55
96		-	2750.2. For ~~purposes~~ of the ~~wage orders under the provisions of this code~~ and ~~the wage orders of the Industrial Welfare Commission~~, ~~the determination of whether~~ a person ~~providing labor or services for remuneration~~ is ~~considered~~ an employee ~~shall be based upon~~ an ~~analysis~~ of ~~whether that person is economically dependent upon the hiring entity. This analysis shall be based upon the economic reality~~ of ~~the workers relationship with the hiring entity by considering only the following six~~ factors:
	56	+	2750.5. (a) There is a rebuttable presumption affecting the burden of proof that a worker an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:
97	57
98		-	(a) The nature and degree of control by the principal.
99		-
100		-	(b) The workers opportunities for profit and loss.
101		-
102		-	(c) The amount of the workers investment in facilities and equipment.
103		-
104		-	(d) The permanency of the relationship.
105		-
106		-	(e) The required skill necessary for success.
107		-
108		-	(f) The extent to which the services rendered are an integral part of the principals business.
	58	+	(a)
109	59
110	60
111	61
	62	+	(1) That the individual has the right to control control, and discretion as to the manner of of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.
112	63
113		-
114		-	(a)There is a rebuttable presumption affecting the burden of proof that an individual performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:
115		-
116		-
117		-
118		-	(1)That the individual has the right to control, and discretion as to the manner of, performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.
	64	+	(b)
119	65
120	66
121	67
122	68		(2) That the individual is customarily engaged in an independently established business.
123	69
	70	+	(c)
	71	+
124	72
125	73
126	74		(3) That the individuals independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principals work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract.
127	75
	76	+	In
128	77
129	78
130		-	(b)In addition to the factors contained in paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status.
	79	+
	80	+	(b) In addition to the factors contained in subdivisions (a), (b), and (c), any paragraphs (1), (2), and (3) of subdivision (a), a person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors license as a condition of having independent contractor status.
	81	+
	82	+	For
131	83
132	84
133	85
134	86		(c) For purposes of workers compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.