AB 5 codified the California Supreme Court holding in Dynamex Operations West, Inc. v. Superior Court and adopted the “ABC” test to determine whether independent contractors should be treated as employees with various exceptions. The study found the law won’t apply to 9% of California independent contractors, primarily high-income workers. This is another important step in California’s fight to protect workers’ pay, overtime rights and benefits from loss due to misclassification of employees as independent contractors. Business-to-Business Contracting Relationships: Importantly, AB 2257 expands the “business-to-business exemption” to apply to sole proprietors. The doctor has privileges and benefits ordinarily given to employees. AB 5 intended to codify the California Supreme Court’s recent Dynamex decision, which significantly narrowed the definition of independent contractor – applying a very strict “ABC” test. AB 5 included an extensive list of exemptions for specific occupations and business relationships, resulting in confusion for many employers. The Test for Employee vs. Updated December 1, 2020. Find out if you’re entitled to the rights and benefits of an employee under California law. By Emily Schroeder & David D . It also will bring in more tax revenue from companies that prefer to save costs by hiring independent contractors (who have smaller take-home wages due to tax laws). In its ruling, the Court establishes a standard that makes it extremely difficult for companies (or individuals) in California to properly classify their workers as independent contractors. Many doctors serve as independent contractors at several hospitals – sometimes working a few shifts at safety net hospitals, which provide lower reimbursement rates, and other shifts at higher-end hospitals which pay more. Another important amendment in AB 2257 is it no longer requires that a business service provider “actually contracts” with other businesses “without restriction form the hiring entity.” Instead, AB 2257 merely requires that the business service provider can contract with other entities and maintain a clientele. The California legislature today approved a controversial new law that will reshape the way businesses across the state classify workers. Independent contractors are no doubt a staple of California’s massive economy: According to a study cited in the bill’s analysis, the number of independent workers jumped 30% from 2005 to 2015. In California, hospitals almost uniformly contend, when they are sued for medical malpractice, that the doctors who work at the hospital are independent contractors, and the hospital is not liable for the doctors’ negligence. Photo from Unsplash. September 25, 2019 Area(s) of Interest: Advocacy Earlier this month, Governor Gavin Newsom signed AB 5 – a sweeping piece of legislation that will reclassify hundreds of thousands of workers as employees instead on independent contractors. There are absolutely conditions where a physician can serve as an independent contractor in California. While supporters of the bill have emphasized its impact on independent contractors, the bill also severely impacts legal obligations governing businesses that hire other businesses. Check out the full list of CompHealth’s employee benefits. On January 1, 2020, the California Assembly Bill 5 (AB5) goes into effect. In most states, licensed professionals (architects, accountants, doctors, lawyers, therapists, etc.) But what you need to know is this- if the doctor is an independent contractor, and not an employee, then you probably will not be able to sue the hospital for the doctor’s negligence. You can find the all updated state laws in this link. Some professions — including doctors, insurance agents, and artists — are exempt from AB5, which takes effect January 1, 2020. As we explained here, AB5 codified and expanded the “ABC” test adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court for determining whether workers in California should be classified as employees or as independent contractors. State Capitol Democrats and organized labor say their new “gig” law will correct the misclassification of 1 million California workers who are falsely deemed independent contractors. The days of being an independent physician may be at an end; employees included. Two California politicians and thousands of Californians who are independent contractors, gig economy workers, and freelancers, are calling on Governor Gavin Newsom to use his Emergency Powers to suspend Assembly Bill 5’s restrictions on independent contracting during the COVID-19 crisis. New California Law Clarifies and Expands Exemptions for Classification of Independent Contractors By: Alexander Polishuk and Armida Derzakarian As the nation battles the COVID-19 pandemic, California has been simultaneously grappling with one of the hottest employment law issue: the classification of workers as employees or independent contractors. On September 4, 2020, California Governor Newsom signed into law AB 2257, a bill designed to clarify issues that arose from AB 5, which became effective January 1, 2020. According to the California Labor Commissioner’s website, the misclassification of workers as independent contractors costs the state roughly $7 billion in lost payroll taxes each year. The doctor hires and pays his or her own associates and staff. However, musicians who perform as a symphony orchestra, in a musical theater production, or at a theme or amusement park are not exempt from the ABC test. 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