Roy Gilbert

California has a new law for contract workers. But many businesses aren’t ready for change


For nearly 18 months, California’s ambitious legislation curbing the use of independent contractors was the focus of noisy street protests, furious lobbying and fearful newspaper editorials. Now Assembly Bill 5 is signed into law and will take effect in January. So businesses will automatically reclassify hundreds of thousands of contractors as bona fide employees with benefits, right? Not so fast. Even as the law’s supporters celebrate what they call the nation’s strongest attack on inequality in the workplace, it is hard to find any California industry that is not hoping for a future carve-out. Technology behemoths such as Uber, Lyft and DoorDash, which treat drivers as independent contractors, have garnered national attention as they prepare to file a ballot initiative exempting themselves from the law. But the upheaval extends far beyond Silicon Valley. Businesses in dozens of sectors, including trucking, entertainment and translating, are scrambling to figure out how the law affects them, whether they must adapt to it, and, especially, whether they can persuade lawmakers next year to add them to a score of carved-out occupations such as doctors and fine artists. “There are many industries that still need to be added,” the California Chamber of Commerce asserted in a statement Sept. 18. “The business community will be aggressively pursuing further exemptions.” Hiring workers as employees rather than contractors can add 20% to 30% to labor costs, given Social Security and Medicare taxes, unemployment and disability insurance, workers’ compensation, sick leave, minimum wage, overtime, rest breaks and protections […]

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