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Will companies successfully overturn AB5?

On Behalf of | Aug 24, 2020 | Employee Classification

California frequently leads the nation in many areas of life and business. From advancing technologies to promoting social justice and more, the state may at times be seen as the hotbed of what the future holds.

At the beginning of this year, a new law, Assembly Bill 5, went into effect and mandated that some businesses reclassify workers from as employees instead of as independent contractors. Many companies have pushed hard against this and continue to do so.

Recent court decision temporarily blocks AB5

As reported by The Verge, the efforts of some businesses to maintain the independent contractor status of most of their workers received at least a temporary boost by the courts. A California Court of Appeals decision put a hold on the law that would have forced companies to convert contractors to actual employees. The block may remain in effect until October while the case continues. Opponents of AB5 may fear rising operational costs should the law remain in effect.

Proposition 22 offers an alternative

Some companies worked to bring to the table Proposition 22. This may provide something of a middle ground between the status quo and AB5. Under Prop 22, companies may offer some limited benefits, such as health care insurance, to their independent contractors. They would not necessarily provide the full range of benefits that their direct employees receive, such as workers’ compensation insurance.

This information is not intended to provide legal advice but instead meant to keep California residents and workers informed about some of the events underway that may dramatically impact their rights or the rights of others who work in the state.

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