A California Senate labor committee is reviewing a bill that could narrow the definition of an independent contractor and limit its use in the state's construction industry. The state assembly approved the measure at the end of last month.
If enacted, California employers would be required to use a strict method, called the ABC test, to determine if a worker is either an independent contractor or an employee entitled to the protections and benefits that go along with that status.
The assembly added exceptions for certain professions to the proposed measure before it went to the state senate. Some professions that would be exempt from the new law would be engineers, architects, real estate licensees and direct sales salespeople.
Under the three-part ABC test, workers can only be classified as independent contractors if they perform their work free from the control and direction of the employer; offer services that are outside the hiring contractor's normal scope of work; and usually work as part of a business.
According to a report from Material Handling & Logistics, some business groups are putting pressure on the California senate to add more exceptions to the measure prior to a vote.
Proponents of AB-5 seek to codify into law a 2018 state Supreme Court ruling, although that decision is under appeal.
Unscrupulous employers sometimes classify workers as independent contractors instead of employees to avoid paying them a fair wage, paying payroll taxes on their behalf and being forced to provide health insurance or workers' compensation coverage.
The proposed measure continues a trend in California and some other states that has seen a broadening of worker protections. A new California law, for example, went into effect Jan. 1, 2018, that makes general contractors ultimately responsible for payment of wages to their subcontractors' employees.
California has also cracked down on those who commit wage theft or otherwise mistreat or cheat workers.
Last month, the California Department of Industrial Relations (DIR) issued almost $598,000 in fines to a Chatsworth, California-based concrete contractor that the agency said underpaid 62 of its workers on two of the company's projects. The DIR said Universal Structural Building Corp.'s fine includes unpaid wages, liquidated damages, overtime, wage statement violations, waiting-time violations and civil penalties.
As part of the same case, and under last year's new law, the general contractor on one of Universal's projects was held jointly responsible for almost $69,000 of the wages Universal allegedly failed to pay.