Independent Contractors

Special Bulletin

On September 18,2019 Governor Newsom approved Assembly Bill 5, Gonzalez, which becomes effective on January 1, 2020

AB 5 (attached) requires a new 3 part test to establish that a worker is an independent contractor.

The essence of the bill establishes that to be classified as an independent contractor the worker must pass all of the following three part test.

1.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.
2.The person performs work that is outside the usual course of the hiring entity’s business.
3.The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

It is probable that a Bill seeking exemptions from the three part test for specified worker classifications will be introduced in January 2020. CMHI is working to have manufactured housing sales persons included as an exempted classification.

If an exemption Bill is introduced with an urgency clause, passed by the legislature and approved by the governor it will become effective immediately until then CMHI members should consult with appropriate human resource resources and/or attorneys to ensure they are in compliance with California Labor Law.

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