Organizations hire for a range of roles — contractors, part-time, casual, freelance. Due to advances in technology and evolving customer expectations, new ‘freelance’ occupations continue to emerge.
The gig economy signifies a new work world in which many are being hired as independent contractors and freelancers instead of full-time employees. The growth of Uber and Lyft marks the beginnings of a rapid rise of the gig economy. For example, for Uber and Lyft, drivers make their own schedule and work when they want, getting paid for each ride provided.
This new era of the gig economy has allowed many individuals to earn an income more flexibly than ever before. Being an independent contractor is now where a lot of the workforce is moving towards — working remote being a tremendous incentive. In response to this new rise in contracted and freelancing employees, California has enacted a bill that has gone into effect starting January 1, 2020. Speak to a San Jose Corporate Litigation Lawyer to learn more and if it could affect your company.
What is AB5, Or The Gig-Worker Rule?
The California Assembly Bill 5 (AB5), also known as the gig-worker rule, requires Lyft, Uber, and other app-based businesses to pay employees minimum wage and provide benefits such as sick pay and health insurance to all their workers in California. Also, as employees instead of independent contractors, drivers can legally be able to negotiate contracts and unionize. Alongside the help of a corporate attorney, you can learn more about AB5 and avoid violating any corporate bylaws that could result in business litigation.
Moreover, Uber and Lyft, along with individual workers and other companies, have argued that this new gig-worker rule will possibly eliminate the flexibility that so many of their drivers’ value. The flexibility of drivers choosing how many rides to do, setting their own hours, and, essentially, being their own boss by managing their work life.
These companies, in response, have filed the Protect App-Based Drivers Services Act with the California Attorney General’s Office. They hope that drivers can remain classified as independent contractors after the gig-worker law/bill or AB5 goes into effect. However, drivers are divided on the ballot. Our corporate litigation lawyer team can unpack any of the following if need be.
The AB5 requires companies to adopt the ABC test legal standard to determine employment status. This ABC test means the following documentation needs to be provided. For companies to demonstrate that a worker is an independent contractor, they need to provide documentation to satisfy the following three categories:
- The worker is free from any control and direction when performing company services
- The worker is performing services or work outside of the company’s type of or usual course of business.
- The worker has their own trade or independent business beyond the job they were hired for. Moreover, the passage of AB5 could influence other states to follow a similar trend.
Ask A Business Attorney: How Will This Law Affect Me?
This new law will impact many other companies and workers as well. A corporate attorney can provide actionable steps if you have been personally affected by these new, sudden shifts. In recent news, some companies have announced that they’ll be ending contracts with hundreds of freelance workers as they begin preparation for the implementation of this new gig economy law. A corporate attorney can guide you if you’re in this same situation.
With gig-economy jobs and services becoming more widespread and frequent, AB5 and the possibility of similar laws going into place in the near future, this new work world is quickly coming into focus.
As a business attorney law firm, we believe in educating and informing clients. It’s essential to stay informed of any and all laws that can affect your company or business venture, especially in today’s workforce, where the shifts are becoming frequent and slightly more unpredictable. A corporate litigation lawyer can protect your company or individual employers. Understand how your company can be proactive in protecting your assets, and more, Nick Heimlich Law can help.
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