California's statutory "ABC test" for classifying workers as independent contractors (I/Cs) - enacted in 2019 -- is among the most restrictive in the nation:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
(B) The person performs work that is outside the usual course of the hiring entity's business; and
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Point B is the kicker. No matter a worker's lack of supervision or his/her clearly separate pursuit of a trade or business, that person is the hiring business's employee if performing any of the central functions of that enterprise.

As this "innovation" in the law threatened to wreak havoc in numerous industries and professions classifying independents by the traditional balancing of control factors, the legislature has tempered the test with numerous exceptions, e.g., the building trades and law practice. See articles referenced below.

Any worker falling within an ABC test exception must yet satisfy the extensive, long- standing state and federal criteria to establish his or her independence, including the IRS factors and numerous rulings.

Now add to those standards the federal Department of Labor's (DOL) Final Rule, effective March 11, 2024, for I/C classification under the Fair Labor Standards Act.

The DOL's Fact Sheet 13 sets out the Final Rule's six primary, equally weighted factors to determine whether a worker is economically dependent on the hiring entity (employer):

1. The worker's opportunity to profit or lose from the relationship based on the worker's managerial skill, including:
   • Ability to negotiate payment for work;
   • Marketing and other efforts by the worker to expand the worker's business;
   • Worker choice on whether to accept jobs and when to do them;
   • Worker decision-making on hiring, renting space, and obtaining equipment and materials;

1. Relative investment by the hiring entity and the worker, including the latter's purchase of tools and other investments to support the growth of his/her own business;

1. The relative permanence of the work relationship -- sporadic work, specific projects, and a worker's non-exclusive relations with the hirer support I/C status;

1. The nature and degree of control exercised by the hiring entity over the worker -- imposing hours and supervising worker performance look like employment;

1. Whether and to what extent the worker's duties and labor are an integral part of the hiring business. The greater centrality, the more likely it's employment. Someone painting a paint store's walls is less like an employee than the person hired to sell the paint; and

1. A worker's a high level of skill and initiative to perform the work can support I/C status.

Take-Aways: Correct classification of independent contractors is always a case-by-case inquiry through a morass of state and federal criteria, best navigated with the aid of a skilled management-side employment attorney.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• Employee or Independent Contractor? Employers Who Misclassify Workers Put Themselves at Risk (September 16, 2022)
• California's Newest Independent Contractor Law Part 5 - New "Music and Entertainer" Exemption from the Strict "ABC" Test (October 29, 2020)
• California's Newest Independent Contractor Law Part 4- Amateur Umpires and Referees Among Expanded "Specified Occupations" Exceptions to Strict Test (October 22, 2020)
• California's Newest Independent Contractor Law Part 3 - "Fine Artists" and Other Clarified and Expanded Professional Services Exemptions (October 10, 2020)
• California's Newest Independent Contractor Law Part 2 - Revised Referral Agency Exception (September 24, 2020)
• California's Newest Independent Contractor Law Part I - Revamped Business-To-Business Exceptions (September 17, 2020)

Helena Kobrin
Tim Bowles
April1 5, 2024

“Families First” Rules Continue to Evolve

In response to a recent New York court ruling more favorable to employees, the Department of Labor (DOL) reaffirmed, revised and/or further explained the Families First Coronavirus Response Act (FFCRA) rules and frequently asked questions. Effective September 16, 2020 the regulations clarify:

• Leave Available Only When Work Available: Any type of FFCRA leave may be taken only if work would otherwise be available. Thus, an employee may not take FFCRA leave if the employer has temporarily or permanently ceased certain operations or is forced to furlough the worker for legitimate business reasons. See, 29 Code of Federal Regulations section 826.20.
• Approval Required for Intermittent Leaves: Employer approval will be needed for taking intermittent FFCRA leave. See, 29 Code of Federal Regulations section 826.50.
• Who is a “Health Care Provider” for Whom Leave May be Unavailable? Although the FFCRA permits “health care providers” to deny FFCRA leave to their employees, the New York court rejected the DOL’s broad inclusion of healthcare workers indirectly involved in health care delivery. The DOL now redefines “healthcare provider” to those who either meet the definition of that term under the Family and Medical Leave Act (FMLA) regulations (i.e., a licensed doctor, nurse practitioner, or other health care provider permitted to issue an FMLA certification); or provide direct diagnostic, preventative or treatment services or other integrated services necessary to the provision of patient care which, if not provided, would adversely impact patient care (e.g., nurses, nurse assistants, and medical/laboratory technicians). See, 29 Code of Federal Regulations section 826.30.
• Who is Not a Health Care Provider? Specifically, a “healthcare provider” does not include IT professionals, building maintenance staff, HR personnel, cooks/food services workers, records managers, consultants and billers, even if they work at a hospital or other health care facility. See, revised DOL FAQ No. 56.

• Required Notice and Documentation to Qualify for Leave: Employees must provide their employers with required notice and documentation substantiating the need for FFCRA leave as soon as practicable. See, 29 Code of Federal Regulations section 826.90.

In its September 11 press release, Wage and Hour Administrator Cheryl Stanton stated, “As the economy continues to rebound, more businesses return to full capacity, and schools reopen, the need for clarity regarding the Families First Coronavirus Response Act paid leave provisions may be greater than ever…. Our continuing robust response to this pandemic balance support for workers and employers alike, and remains our priority.” Thus, employers should review existing policies and procedures to confirm compliance with the revised regulations.

See also:

• Over the Horizon – Broader “Worker-Friendlier” COVID Leave Criteria? (August 21, 2020)
• Paid Sick Leave Going Viral – California Cities and Counties Expanding Pandemic-Related Benefits (May 29, 2020)
• It’s a Wash – COVID 19 Paid Leave and Tax Credits(April 9, 2020)
• Federal Coronavirus Workplace Relief – New Paid Sick Leave, Family Leave and Tax Credits Effective April 2, 2020(March 23, 2020)

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth

October 8, 2020

“Families First” Rules Continue to Evolve

Cal/OSHA Fines Frozen Food Firm for COVID-19 Violations

On September 9, 2020, Cal/OSHA announced citations and $400,000 in proposed penalties to Overhill Farms Inc. and its temporary employment agency Jobsource North America Inc. for repeatedly failing to protect hundreds of workers from COVID-19 exposure in Vernon frozen food plants.

The agency alleges that on April 28, it found 510 employees unnecessarily exposed to COVID-19 with at least 20 employees contracting the disease and one fatality.

According to Cal/OSHA the employers failed to install physical barriers or implement other workplace protection procedures such as where employees clock in and out, in the break room, during parking operations and at the cart where they put their uniforms. The employers also allegedly failed to train employees on COVID-related hazards, investigate the COVID illnesses or report the fatality to Cal/OSHA as required by law.

Cal/OSHA Chief Doug Parker commented: “It is critical that employers evaluate the workplace and take proactive measures to prevent transmission of COVID-19 in the workplace. If a COVID-19 illness occurs, employers must investigate the case to determine if additional protective measures should be taken and report the serious illnesses and deaths to Cal/OSHA. Employers should also notify workers of possible exposure and report outbreaks to county public health officials.”

Cal/OSHA has recently issued temporary emergency standards to further protect workers from COVID-19. The agency also offers multi-lingual employer guidances by industry, webinars, training and other educational materials, and FAQs regarding pandemic protection, recordkeeping and reporting standards.

See also:

• Cautionary Tale Episode 38: Food For Second Thought – Cal/OSHA Fines Supermarkets For COVID-19 Violations (October 16, 2020)
• Suffocation Orders – California’s Safety Agency Now With Pandemic “Imminent Hazard” Shutdown Powers (October 2, 2020)
• Update California COVID Plan B – “Blueprint” Workplace Return Improving Conditions Statewide (September 25, 2020)
• Pandemic Police on Patrol – Cal/OSHA Hitting Employers Statewide for COVID-19 Non-Compliance (September 10, 2020)

For further information, please or contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth

December 2, 2020

Cal/OSHA Fines Frozen Food Firm for COVID-19 Violations

Source: California All; Blueprint for a Safer Economy
https://covid19.ca.gov/safer-economy/
Updated September 4, 2020

“Blueprint for a Safer Economy” For a Tiered Return to the Workplace

A month into California’s first attempt at loosening commercial restrictions (the “Pandemic Resilience Roadmap”), a July 13, 2020 public health order required all counties to again close indoor operations for dine-in restaurants, movie theaters, and like establishments. See, One Big Scrappy Family, California’s Coronavirus Response Statewide and Local (August 7, 2020).

Based on greater experience, Sacramento is now embarked on its second major round of statewide business pandemic recovery guidelines, California’s Plan for Reducing COVID-19 and Adjusting Permitted Sector Activities to Keep Californians Healthy and Safe, or the “Blueprint for a Safer Economy” for short.

The Blueprint, effective August 31, refines the California Department of Public Health’s (CDPH) four pandemic stages (ranging from maximum shutdown to full cancelation of the state’s “stay-at-home” order) to four tiers of risk transmission, with a county-by-county assessment conducted weekly:

• Tier 1; Widespread risk (purple);
• Tier 2; Substantial (red);
• Tier 3; Moderate (orange); and
• Tier 4; Minimal (yellow).

Tier 4 is not colored green because some restrictions remain at that level.

An accompanying chart outlines the degree of restriction for each business type at each tier. For instance, companies that fall within the so-called “critical infrastructure” (medical, grocery, transport, etc.) remain open with modifications no matter what “tier” a county is in. Places of worship, movie theaters, and restaurants must comply with identical indoor and capacity restrictions, lessening to maximum 50% capacity in Tier 4. Professional sports must proceed without live audiences no matter the tier.

Assessment is week-to-week, measured by a county’s case rate, percentage of positive tests and many other metrics (statistics). The CDPH is posting each county’s current status at the beginning of each week. Reflecting a greater caution than California’s June reopening initiative, a county will remain in a tier for at least three weeks before it may advance to the next and may only move one tier at a time.

City and other local health jurisdictions may continue to maintain more restrictive health measures in their discretion.

See also:

• Over the Horizon – Broader “Worker-Friendlier” COVID Leave Criteria? (August 21, 2020)
• Workplace Discrimination in a Pandemic – California’s Updated COVID-19 FAQs Call for Careful Decision Making (August 5, 2020)
• Fourth and Long – California’s Employer Playbook For a Safe Reopening (July 31, 2020)

Tim Bowles

September 4, 2020

“Blueprint for a Safer Economy” For a Tiered Return to the Workplace

Cal/OSHA Hitting Employers Statewide for COVID-19 Non-Compliance

California’s Division of Occupational Safety and Health, better known as Cal/OSHA has gone from bark – its July 16 notice calling on all employers to carefully review and follow the state’s COVID-19 workplace safety and health guidance– to bite.

In two press releases, September 4 and September 9, the agency has identified 13 employers up and down the state, including manufacturers, retailers and a health care provider, that it has recently cited for a collective $500,000-plus in penalties for failing to provide adequate worker pandemic protection. The largest alleged offenders include a Vernon frozen food plant and its temporary employment agency, each tapped for over $200,000.

Cal/OSHA claims to have found hundreds of that plant’s employees “exposed to serious illness from COVID-19” due to the lack of physical distancing procedures among workers including where they clock in and out of their shifts, at the cart where they put on gloves and coats, in the break room, on the conveyor line and during packing operations.

The agency also charges the plant put workers at risk of exposure by failing to train employees to investigate any of the more than 20 COVID-19 illnesses and one related death Cal/OSHA claims to have uncovered.

Cal/OSHA clearly aims by these broad announcements to motivate greater compliance with its multi-industry guidelines and use of its multiple language educational materials as means to hasten full defeat of the virus.

“It is critical that employers evaluate the workplace and take proactive measures to prevent the transmission of COVID-19 in the workplace,” said Cal/OSHA Chief Doug Parker. “If a COVID-19 illness occurs, employers must investigate the case to determine if additional protective measures should be taken and report the serious illnesses and deaths to Cal/OSHA. Employers should also notify workers of possible exposure and report outbreaks to county public health officials.”

While sounding the alarm on alleged violators, the agency provides live, online training for employers in the agricultural, meatpacking and food processing sectors as well as direct liaison with managers and workers alike through its Consultation Services Branch, (800) 963-9424.

It should of course not take government enforcement actions to encourage any employer to adopt sound pandemic-related workplace protocols as part of its state-mandated “Injury and Illness Prevention Plan” (IIPP). We are assisting management regularly in the process.

See also,

• California COVID Plan B – “Blueprint for a Safer Economy” for a Tiered Return to the Workplace (September 4, 2020)
• Workplace Pandemic Prevention – Model Employee Handbook and Forms Include Vital COVID-19 Protocols(September 3, 2020)
• Over the Horizon – Broader “Worker-Friendlier” COVID Leave Criteria? (August 21, 2020)

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Tim Bowles

September 10, 2020

Cal/OSHA Hitting Employers Statewide for COVID-19 Non-Compliance

Revamped Business-To-Business Exceptions

Effective September 4, 2020, Assembly Bill (AB) 2257– through Labor Code section 2776 – modifies and expands exemptions for bona fide business-to-business contracting relationships from the severe ABC independent contractor test. The more-forgiving Borello multi-factor balancing test will continue determine contractor vs. employee status for such associations.

A business entity providing services (the “service provider”) to another business entity (the “contracting business”) can fall within AB 2257’s modified business-to-business exception if each enterprise is a sole proprietorship, corporation, partnership, limited liability company or limited liability partnership.

To qualify for the exemption, AB 2257 also provides:

• Under the previous AB 5 standard, the service provider had to provide services directly to the contracting business rather than to its customers. AB 2257 now permits the service provider’s employees to deliver such contracted services directly to the contracting business’ customers so long as they do so under the service provider’s name and the service provider regularly contracts with other businesses. For example, if properly structured, a custom blinds company can now maintain its independence if hired by an interior designer to install window treatments for the designer’s clients.
• The service provider’s written contract must now specify the payment amount, rate of pay and due date.
• The service provider must still maintain its own separate business location, which may now include a personal residence.
• Prior law required a service provider company to be concurrently engaged in multiple contracts with other businesses in order to maintain the business-to-business exception to AB 5. The new law merely states the service provider must be allowed to contract with other businesses without restrictions. Thus, a service provider working exclusively on a large job for a single contracting business does not have to literally perform work for other businesses simultaneously to qualify for the exemption.
• Prior law required the service provider to provide its own tools, vehicles and equipment. The new law is not so strict, recognizing that a service provider may use some of the contracting business’s resources without losing its independence. For example, an IT service provider might well have access to and utilize the contracting company’s office equipment and proprietary software to troubleshoot and resolve a computing problem.

The service provider must also:

• be free from the contracting business’s control and direction both under the contract and in fact;
• be customarily engaged in an independently established business of the same nature as the work performed;
• advertise and hold itself out to the public as available to provide the same or similar services;
• negotiate its own rates and set its own hours and location of work;
• obtain any required business license and/or tax registration; and
• refrain from performing construction-type work that requires a license from the Contractor State Licensing Board. (Independent contractor exemption from the ABC test in the construction trades is subject to another set of rules; to be covered in a future article.)

New “On-Site” Services Exception: AB-2257 also creates a new “on-site services exception” to the ABC test when two businesses contract to provide services at “single-engagement events,” i.e., a stand-alone non-recurring event in a single location or a series of events in the same location no more than once a week. Properly structured, this would permit a caterer or stand-up entertainer to maintain independence from an event producer while serving or performing for guests. See, Labor Code section 2279.

This on-site exception applies for any type of single-engagement services except those provided in certain industries deemed “high-hazard” or at high risk of independent contractor misclassification including, for example, specific agricultural, construction, delivery, transportation/trucking and manufacturing pursuits as well as some healthcare and social assistance businesses such as in-home care and psychiatric hospitals.

To meet this on-site, single-engagement exception, the parties must be at arms-length, thus free from the other’s direction and control, able to negotiate pay rates, operating from separate business locations, providing their own tools, obtaining any required business license and/or tax registration, customarily engaging in the same or similar type of work or holding themselves out to potential customers as available to do so, and being permitted to contract with other businesses for similar services and maintaining their own clientele without restrictions.

AB 2257’s modifications, additions and clarifications should make it easier for many more businesses to legitimately contract with other businesses while avoiding the rigid ABC test. Any such arrangement should of course be carefully stated in writing as well as performed consistent with these new criteria.

See also,

• Gagging the Gigs – California Remodels Exceptions to Its Strict Independent Contractor Test (September 11, 2020)
• Back From the Brink – For Now- Uber and Lyft’s Last-Minute Reprieve From Order to Convert Drivers to Employees (August 27, 2020)
• Making Dynamex Retroactive – Federal Appeals Court Rules New Independent Contractor ABC Test Applies Before It Existed (May 31, 2019)
• Independent Contractor or Employee? – California Legislature Dealing with Competing Proposals to Kill or Expand New Dynamex Test (April 19, 2019)
• Independent Contractor Status? It Depends – Radically New Dynamex Test Only Applies to Certain Employee Classification Cases (November 9, 2018)

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth

September 17, 2020

Revised Referral Agency Exception

Effective September 4, 2020, Assembly Bill (AB) 2257 and Labor Code section 2777 broaden the “referral agency” exception to the state’s strict “ABC” definition of independent contractors.

A referral agency is a “business that provides clients with referrals for service providers to provide services under a contract,” other than the specific services excepted under section 2777.

Service providers are sole proprietors or business entities that “agree to the referral agency’s contract and use the referral agency to connect with clients.”

A client contracting services from a referral agency may be an individual or a business contracting for services that its employees do not usually provide and that are not within its usual course of business.

Referral agency services eligible for exemption from the rigid ABC test “include, but are not limited to, graphic design, web design, photography, tutoring, consulting, youth sports coaching, caddying, wedding or event planning, services provided by wedding and event vendors, minor home repair, moving, errands, furniture assembly, animal services, dog walking, dog grooming, picture hanging, pool cleaning, yard cleanup, and interpreting services.” Section 2777 provides definitions for tutor, youth sports coaching, interpreting services, consulting, and animal services.

The highlighted language means that other businesses may also qualify for the referral exemption, in contrast with the AB 5 version that limited the exceptions to an enumerated list of businesses.

However, the new law explicitly excludes from exemption “referrals for businesses that provide janitorial, delivery, courier, transportation, trucking, agricultural labor, retail, logging, in-home care, or construction services other than minor home repair” or OSHA or Department of Industrial Regulations high-hazard occupations.

The exemption is available to sole proprietors or business entities operating a referral agency that:

• Does not control the service provider’s work both factually and under the contract;
• Requires service providers to certify they have any required business or professional license or tax registration (referral agency must keep the documentation for three years);
• Has the service providers deliver the services under their own names, not that of the referral agency;
• Has the service providers set their own rates, with the right to accept or reject any rate and negotiate those through the referral agency or directly with the client; and
• Has service providers set their own hours with the client receiving the work.

Other requirements are:

• In contrast to the AB 5 exception, the service provider must only be customarily engaged or was previously engaged in an independently established business or trade; such provider is also no longer required to have a separate clientele but still must be free to work for other clients and agencies; and
• A service provider must have his/her/its own tools and supplies, and if required for the type of work, hold its own license from the Contractors State Licensing Board.

For any referral agency that qualifies for the exemption, the less-stringent Borello balancing test will govern whether a referred service provider is a contractor or an employee.

See also:

• California’s Newest Independent Contractor Law Part 1 – Revamped Business-to-Business Exceptions (September 17,2020)
• Gagging the Gigs – California Remodels Exceptions to Its Strict Independent Contractor Test(September 11, 2020)

• Back From the Brink – For Now – Uber and Lyft’s Last-Minute Reprieve From Order to Convert Drivers to Employees (August 27, 2020)
• Making Dynamex Retroactive – Federal Appeals Court Rules New Independent Contractor ABC Test Applies Before It Existed (May 31, 2019)
• Independent Contractor or Employee? – California Legislature Dealing with Competing Proposals to Kill or Expand New Dynamex Test (April 19, 2019)
• Independent Contractor Status? It Depends – Radically New Dynamex Test Only Applies to Certain Employee Classification Cases (November 9, 2018)

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin

September 24, 2020

“Fine Artists” and Other Clarified and Expanded Professional Services Exemptions

Out of Sacramento’s political process has come passage of AB 2257 and new Labor Code 2778, effective September 4, 2020, providing a broader list of professional services exemptions from the rigid “ABC” test for independent contractor classification. See, Bullet Dodging Part 2 – California’s “Professional Services” Exemption To Strict Independent Contractor Definition; Licensed Beauticians Among the Eligible (October 2019).

The earlier AB 5 version did not clearly define who qualified as a “fine artist” under this exemption. The revised law now defines the term as “an individual who creates works of art to be appreciated primarily or solely for their imaginative, aesthetic, or intellectual content, including drawings, paintings, sculptures, mosaics, works of calligraphy, works of graphic art, crafts, or mixed media.”

Under Labor Code 2778’s broader exclusions from the strict ABC criteria, still photographers, photojournalists, videographers, and photo editors who do not work on motion pictures (e.g., “theatrical or commercial productions, broadcast news, television, and music videos”), and digital content aggregators who assist them, are no longer limited to 35 submissions per year to a single business as in the AB 5 version, but:

• must have a “written contract that specifies the rate of pay and obligation to pay by a defined time”;
• may not be “directly replacing an employee who performed the same work at the same volume for the hiring entity”;
• may not be performing the work principally “at the hiring entity’s business location”; and
• may not be “restricted from working for more than one hiring entity.”

Labor Code 2778 also exempts freelance writers, editors, and newspaper cartoonists from the 35 maximum submissions per client requirement of AB 5, and adds to their ranks translators, copy editors, and illustrators. Their contracts are also subject to the bullet points above and must address the intellectual property rights.

The new law also adds several professions performed by an individual: “content contributor, advisor, producer, narrator, or cartographer for a journal, book, periodical, evaluation, other publication or educational, academic, or instructional work in any format or media,” subject to the same requirements as the writing professions in the preceding paragraph.

Also exempt are:

• “A specialized performer hired by a performing arts company or organization to teach a master class for no more than one week”;
• Appraisers;
• Licensed and registered professional foresters;
• Real estate licensees (with special provisions as to workers compensation and unemployment insurance requirements);
• Home inspectors; and
• Licensed repossession agencies “free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.”

Under the new law, while they are still required to have a business licenses if required in the jurisdiction, all professionals have a breathing period of six months from September 4, 2020 – the effective date of AB 2257 – to obtain those licenses.

See also:

• California’s Newest Independent Contractor Law Part 2 – Revised Referral Agency Exception (September 24, 2020)

• California’s Newest Independent Contractor Law Part 1 – Revamped Business-to-Business Exceptions (September 17, 2020)
• Gagging the Gigs, Plan B – California Remodels Exceptions to Its Strict Independent Contractor Test (September 11, 2020)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin

October 10, 2020

“Fine Artists” and Other Clarified and Expanded Professional Services Exemptions

Voters Pass Proposition 22; A Reprieve for California’s Gig Economy

58 percent of California voters have approved Proposition 22, allowing Uber, Lyft, PostMates, DoorDash, Instacart, and other gig economy companies to continue classifying their workers as independent contractors. Effective immediately, such drivers are no longer subject to the rigid ABC test first issued in California Supreme Court’s Dynamex decision (2018) and furthered in the legislature’s Assembly Bill (AB) 5 (2019) and AB 2257 (2020)

Proposition 22 creates a new, hybrid version of independent contractor status for “application (app)-based” drivers working for “network companies” which pick up and deliver goods or people. It guarantees 120 percent of minimum wage for “engaged” time, i.e., from pick-up to delivery, as well as per-mile compensation for vehicle expenses, and other benefits. When a driver makes a pick up in a higher minimum wage county or city, the higher minimum applies to that trip.

A company utilizing this model may not:

• unilaterally require specific times, days, or minimum hours that the drivers must be logged into the app;
• require drivers to accept specific rideshare or delivery requests in order to maintain access to the app;
• prevent the drivers from working for other rideshare or delivery services other than when they are engaged in service for that company; or
• restrict drivers from working in any other business or occupation.

In order for the relationship to qualify, network companies and drivers must have written contracts prior to the driver accessing the company’s app and a company may only terminate a driver on grounds listed in the contract.

The new law also provides an earnings floor, and if a driver makes less than that amount for a 14-day earnings period, the company must make up the difference. In addition, companies may not take any portion of tips a driver receives from customers, must pay the tips to the driver, and may not decrease a driver’s pay because of tips.

Other rights, benefits, and policies include:

• a healthcare subsidy based on amount of driving time;
• occupational accident insurance coverage and disability coverage;
• accidental death insurance if a death results while the driver is online with the company’s app;
• an anti-discrimination policy pursuant to the Unruh Civil Rights Act (California Civil Code 51);
• a sexual harassment policy that drivers must study before driving for the company; and
• a limitation of 12 hours of driving in any 24-hour period without being logged off the app for at least six hours.

Companies must require criminal background checks for all drivers prior to accessing the company’s app, with certain convictions disqualifying the driver (e.g., felony sex or other violent crimes). They must also provide safety training to drivers.

A company are also must have a zero-tolerance policy for workers under the influence of drugs or alcohol while driving.

As reflected in the recent “ABC” legislation above and the contrasting large majority who voted for Prop. 22, independent contractor status for app-based drivers has been and remains a hot topic.

While the balance now presented by Proposition 22 will not satisfy everyone, it permits the business survival of network companies while enhancing driver work conditions and maintaining the convenience and relatively low cost of such transportation and delivery services.

See also,

• Back From The Brink – For Now – Uber and Lyft’s Last-Minute Reprieve From Order to Convert Drivers to Employees (August 27, 2020)
• Traffic Slamming – New Fronts on California’s War Against Uber and Lyft (August 13, 2020)
• California’s Newest Independent Contractor Law Part 2 – Revised Referral Agency Exception (September 24, 2020)
• California’s Newest Independent Contractor Law Part 1 – Revamped Business-to-Business Exceptions (September 17,2020)
• Gagging The Gigs, Plan B – California Remodels Exceptions to Its Strict Independent Contractor Test (September 11, 2020)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
November 6, 2020

Voters Pass Proposition 22; A Reprieve for California’s Gig Economy