California Assembly Bill AB612

California 2021-2022 Regular Session

• Introduced: 2/12/21
• Refer: 2/25/21
• Report Pass: 3/23/21
• Refer: 3/24/21
• Failed: 2/1/22

Caption

Worker classification: business-to-business voluntary deposit arrangements.

Impact

AB 612 is expected to have significant implications for those who engage in business-to-business agreements that involve deposits of tangible personal property. By allowing such arrangements to bypass the ABC test, it could alter how businesses hire and retain workers. The impact of this bill on state laws centers on the delineation between employees and independent contractors, which could result in changes to labor rights, benefits, and protections previously afforded to workers classified under the ABC test. The exemptions provided in the bill might incentivize more businesses to enter into these types of arrangements, thereby influencing the overall labor market in the state.

Summary

Assembly Bill 612, introduced by Assembly Member Mayes, relates to worker classification and amends the California Labor Code by introducing a new exemption from the commonly applied ABC test. This test is utilized to determine whether workers qualify as employees or independent contractors. AB 612 specifically targets bona fide business-to-business arrangements that involve voluntary deposits, allowing these relationships to be classified under a different set of criteria based on established case law from Borello. The legislation aims to clarify and potentially ease the classification of workers in certain contracting relationships, hoping to foster more flexibility in business operations within California.

Sentiment

The sentiment surrounding AB 612 is mixed, with proponents arguing that it facilitates operational efficiencies for businesses that often deal with independent contractors in a competitive environment. They posit that the bill could lead to increased economic activity and job creation by not heavily burdening businesses with stringent classification standards. Conversely, opponents express concern that the bill could undermine worker protections and lead to exploitation in the employment relationship by minimizing the safeguards traditionally upheld by the ABC test, potentially leaving workers vulnerable to misclassification.

Contention

The primary contention regarding AB 612 revolves around its potential to weaken existing labor standards and protections. Critics argue that allowing exemptions from the ABC test could lead to a rise in misclassification disputes, where workers lose out on benefits and rights consistent with employee status. Additionally, some stakeholders worry about the impact on the state’s overall labor regulations, as they fear this bill may set a precedent for further deregulation in worker classifications in California. The debate encapsulates broader discussions about maintaining balance between fostering a favorable business climate while ensuring comprehensive protections for all workers.