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IIABCal Working With Labor To Limit Application of Dynamex Decision

SACRAMENTO, CA, Dec. 5, 2018 — In response to the Dynamex decision, IIABCal Legislative Advocate John Norwood has been leading an insurance industry effort to draft legislation that would permit licensed insurance agents and brokers to continue to choose whether they wished to work as employees or as independent contractors, and has met with Labor Federation leaders to explain why producers want and need to have the option.

The California Labor Federation will introduce, in an attempt to strictly control, legislation to codify the sweeping Dynamex decision of the California Supreme Court, which articulated new rules for independent contractors that, unless changed, would force most California employers to stop hiring independent contractors, and reclassify existing contractors as employees.

Historically, administrative agencies and courts have developed a variety of rules for distinguishing employees from independent contractors.  While the exact scope of those rules varied from one context to the next, all were focused at their core on the extent to which an employer did or could “control” the actions of the worker; the greater the level of control, the more likely the worker was to be regarded as an employee.

In Dynamex, the Supreme Court effectively threw out the old rules and adopted an “ABC test.”  To qualify as an independent contractor, an employer must now prove all of the following:

A)      That the worker is free from the control and direction of the hirer in the performance of the work; and

B)      That the worker performs work outside the usual course of the hiring entity’s business; and

C)      That the worker is customarily engaged in an independently-established trade, occupation or business of the same nature as the work being performed for the hiring entity.

Caitlin Vega, legislative director for the California Labor Federation, confirmed in a Sacramento Bee story this week that her organization had been meeting with various organizations opposed to the Court’s decision and seeking legislative relief.

She was quoted as saying that Labor is open to incorporating changes in the bill that clarify application of the “ABC” test, and that there could be some industries with unique employment models that are exempted.

“We’ve tried to understand what the concerns were,” Vega told The Bee.  “Where there are high-wage workers who are not in need of this protection, we’re open to hearing that argument.”