California’s Pending Independent Contractor Rehaul: How the Restaurant Industry Will Be Affected

The California legislature passed AB 5, a sweeping overhaul of California’s independent contractor requirements, which Governor Gavin Newsom is expected to sign into law.  The bill narrows the definition of an independent contractor, meaning that most workers will be classified as employees.  If signed, the bill will go into effect on January 1, 2020.

In April 2018, the California Supreme Court issued the landmark Dynamex ruling, in which it adopted a new legal standard for determining whether workers should be classified as employees or as independent contractors for purposes of California wage orders. The court adopted the “ABC test.”  Employers may only classify a worker as an independent contractor if the hiring entity satisfies all three conditions of the test: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; (B) that the worker…