Looking Ahead – California Legislature to Address Dynamex and a Host of New Employment Proposals

By Benjamin Ebbink, Fisher Phillips

February 22 was the last day to introduce new legislative proposals for the 2019 California legislative year. A whopping 2,576 bill were introduced before the deadline, making for an extremely busy legislative year ahead. Although new ideas can be added later through the “gut and amend” process, we now have a fairly clear sense of the labor and employment issues the California legislature will be confronting in 2019.

Based on the bills introduced by the deadline, legislative proposals can be classified into four main areas: (1) bills dealing with employee/independent contractor status and the aftermath of the California Supreme Court’s decision in the Dynamex case; (2) reintroductions of bills that were previously vetoed by Governor Brown (or were otherwise unsuccessful) but are being given a new shot with California’s new governor, Gavin Newsom; (3) a host of bills dealing with the popular topic of paid family leave and/or paid sick leave; and (4) everything else, including significant new areas of proposed regulation.

Dynamex-Related Legislative Proposals

As we discussed previously here, it was clear from the very first day of the 2019 legislative session that Dynamex would be the most significant employment issue to be tackled this year. In case you’ve been living under a rock for the last several months or so, the most significant and pressing concern facing California employers is continued fallout from the California Supreme Court’s blockbuster Dynamex decision. There, the court adopted an entirely new test for determining whether an individual is an employee or an independent contractor. As we discussed here, this new legal standard, known as the “ABC Test,” makes it more difficult for businesses to utilize independent contractors and threatens to upend entire industries in California—and has potential far-reaching implications for the gig economy in particular.

The legislative negotiations around Dynamex will be significant in 2019, and there are indications that Governor Newsom is directly engaged in attempting to push interested stakeholders to reach a compromise on this contentious issue. Because the stakes are so high, Dynamex-related issues will dominate the legislature’s labor and employment bandwidth this year, leaving little room for much else.

Bills introduced in 2019 dealing with Dynamex include the following:

AB 5 (Gonzalez) – This bill is sponsored by the California Labor Federation. Although the proposal is only a placeholder (or “spot”) bill for now, it intends to codify Dynamex and “clarify the decision’s application in state law.” This legislative proposal is the likely vehicle for any comprehensive compromise between labor and the business community on this issue.

AB 71 (Melendez) – This bill represents a Republican counter-response to Dynamex and essentially proposes to revert to the previous multi-factor Borello test for determining employee or independent contractor status. AB 71 likely faces an uphill battle in Sacramento, but will be another opportunity for interested stakeholders to engage on this issue.

AB 233 (Cooley) – This bill is an industry-specific proposal and attempts to clarify that insurance agents and brokers shall not be considered “employees” where certain specific conditions are met.

SB 238 (Grove) – This is another Republican measure on Dynamex, but is only a placeholder bill for now.

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