Flip the Script in California
Sep 18, 2019


All eyes are on California as the State Legislature closed its 2019 calendar last week.  We are analyzing this session and tracking a number of influential battles still raging across the state.



In the late hours of the 2019 session, the California legislature passed AB 5, a bill that would grant employee status, and its accompanying benefits, to certain contract workers across the state. The bill provides a straight forward test, previously established by the California Supreme Court in Dynamex, to determine when workers should be designated as employees and not independent contractors.  Supporters of the gig economy have followed this issue closely, as these businesses intentionally classify workers on their platforms as independent contractors, obviating minimum wage laws, workers' compensation coverage, and other benefits. AB 5 now moves to Governor Gavin Newsom, who is expected to sign it.



Of note, AB 5 expands the reach of Dynamex by making the “ABC” test the default test for the entire Labor Code and the Unemployment Insurance Code. Pundits expect to see contentious litigation on the issues of whether the employee definition in AB 5 directly affects gig economy workers, and in particular, drivers for transportation network companies.  In addition to expanding the applicability of the ABC test, AB 5 also broadens the potential liability to businesses that misclassify independent contractors. The bill empowers the State Attorney General and certain city attorneys to pursue injunctions against businesses suspected of misclassifying independent contractors—anytime, anywhere.



On the other hand, AB 5 contains numerous statutory exemptions from the ABC test.  For example, the bill contains a detailed “business-to-business” exemption.  The list of negotiated exemptions also contains certain medical professionals, attorneys, architects, and construction subcontractors. It further exempts “service providers” like graphic designers, event planners, and cleaning services.  Although the independent trucking industry is bracing for the impact of AB 5, one specific amendment in the bill allows drivers working within the construction industry to continue operating as independent truckers for a two-year grace period.



AB 5 is expected to impact at least 1 million workers in California.  The major transportation network companies and their trade associations, who launched public campaigns against the legislation, have pledged tens of millions more to mount a ballot initiative campaign to exempt their member companies from AB 5.  We’ll keep watch to see whether this political action results in an offer that can’t be refused.


Staying in California


Also making news this week, the California State Assembly passed Senate Bill 416, which gives blanket workers’ compensation for all peace officers in the state.  Previous laws specifically named only California Highway Patrol and firefighters as covered employees. Under SB 416, all peace officers are now covered, including peace officers who work at state hospitals.  Notably, SB 416 passed the Assembly 74-0 and is awaiting the Governor’s signature.



Although 2019 included some amendments to the California Consumer Privacy Act (relief for Business to Business communications and exemptions for Publicly Available data) a group of CEOs from some of America’s largest companies have turned their voices to Congress.  In an open letter, CEOs from the Business Roundtable now call upon on Congress to agree on a “well-understood legal and regulatory framework” to govern how consumer data is collected, sold, and shared.  The Business Roundtable released its Framework for Consumer Privacy Legislation, which provides a detailed roadmap of issues it wants a federal consumer privacy law to address.  More to come on this front as the 116th Congress continues this term.


Making Our Way Around the Country


New Hampshire Governor Chris Sununu vetoed a measure that would have required employers to match the pre-incident salary for returning works on partial disability who were placed in gainful employment that reasonably conforms to the employee’s age, training and capacity, and was “similarly remunerative” of the employee’s pre-injury work.  Several industry groups criticized the change in the definition of gainful employment to require employers to pay partially disabled workers the same salary, even if the job they have been placed in is of far less value than their former position.



OSHA’s Directorate of Enforcement Programs announced the agency’s top 10 violation tally for fiscal year 2019, which covers violations cited from October 1, 2018, through August 31, 2019.

The leading violations of FY 2019 were: Fall protection (construction)—general requirements (29 CFR 1926.501) with 6,010 violations; Hazard communication (29 CFR 1910.1200) with 3,671 violations; and Scaffolds (construction)—general requirements (29 CFR 1926.451) with 2,813 violations.  Here is a look at the complete list of the top violations for FY2019.



The Consumer Product Safety Commission (CPSC) elected Democrat Robert Adler to lead the agency and replace outgoing acting chairman, Republican Ann Marie Buerkle.  Adler explained her decision to vote across party lines: “Consumer protection is not political. The head of the commission should be the most experienced, most senior commissioner who has previously served in this role.”  In other CPSC news, the agency launched a new research project on helmets and sports injuries.  Parents of children who have suffered a head injury while playing a contact sport like football, hockey, or lacrosse can now report the head injury directly to the CPSC. The commission hopes the information from the project will help them with future helmet safety standards.



Back to our main story, leaders from around the industry and across the country will convene in Southern California next week for the 2019 Comp Laude® Awards and Gala. The mission of Comp Laude® is to change the narrative of workers' compensation to a more positive dialogue and bring all stakeholders to the table to participate in that conversation. The Way will be on hand next week as our own Cari Miller is a finalist for the Comp Laude® Award for Industry Influence. Congratulations to Cari and all of this year’s finalists—you are all women and men of honor in our book! 


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