DYNAMEX'S "ABC TEST" CODIFIED,

BORELLO TAKES A BACK SEAT

In 1989, the California Supreme Court in Borello & Sons determined that issues involving employee versus independent contractor status would be based upon a "control test" in which various factors would be considered as to who controlled the "means" in which a job is accomplished. That 30-year approach has been changed when on September 18, 2019 California Governor Gavin Newsom signed into law AB 5 which applies the Dynamex "ABC Test" approach to all employment situations including workers' compensation cases effective next year.

The new approach is much stricter in allowing a person to be classified as an independent contractor, as the defense must: A) Prove the worker was free from control and direction in the performance of the work; B) Prove the work was outside the employer's usual course of business, and C) The worker was customarily engaged in an independent trade of the same nature as the work being performed at the job site in question.

Presently exempt occupations include licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers, direct sales salespersons, real estate licensees, commercial fisherman and workers providing licensed barber or cosmetology services. There is pending legislation to include additional exemptions. Note, that where there is an employment dispute as within the otherwise exempt categories, the Borello "control test" would still apply.

[COMMENT: To a large extent, two of three test parts are similar to Borello , it's the second requirement regarding the work not being similar to the employer that is a game changer. Uber, Lyft and DoorDash see AB 5 as a direct attack upon their business models, and have threatened to file lawsuits as well as creating a $90m fund to propose a ballot measure to allow an exemption for their drivers.]