Court Grants Temporary Restraining Order to Pause Enforcement of AB5 Against Motor Carriers

There is some potential good news for California employers, especially in the motor carrier industry. On December 31, 2019, Judge Benitez of the United States District Court, Southern District of California, ruled that the California Attorney General, Secretary of the California Labor and Workforce Development Agency, CA Department of Industrial Relations, CA Labor Commissioner, and Employment Development Department are temporarily enjoined from enforcing Assembly Bill 5 (“AB-5”) against any motor carrier operating in California, pending the Court’s resolution of Plaintiffs’ motion for a preliminary injunction, which is set for hearing on January 13, 2020.

What is AB5?

California recently adopted Assembly Bill 5 (AB 5), authored by Asm. Lorena Gonzalez (D-San Diego). AB 5 places into law an independent contractor test known as the “ABC” test. In order to be considered an independent contractor, a worker must satisfy all 3 parts of the test:

A. The person is free from the control and direction of the hiring entity, both in contract 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 the work performed.

For more information on converting independent contractors to employees, download our FREE AB5 Compliance Handout.

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What You need to Know about Converting Independent Contractors to Employees under California AB-5 – #GIGeconomy

On September 18, 2019, California Governor Gavin Newsom signed into law A.B. 5, solidifying a tighter standard of rules for classifying a worker as an independent contractor. The new standard, known as the Dynamex standard, codifies and expands the earlier California Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court of Los Angeles. It  replaces the former Borello test, and puts in place a more simple three-pronged ABC test. The significant effect is that many workers in California will now be classified as employees instead of independent contractors (also informally known as “1099” workers). This change is one of the most significant disruptions to California employment law in decades. The law took effect on January 1, 2020. FIND OUT how to comply with this law by downloading our easy-to-understand instructions.

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