Michael Kun Quoted in “Battles Over California’s Dynamex Law Just Beginning"

Assembly Bill 5, California’s new law making it harder for businesses to classify their workers as independent contractors, has garnered a lot of attention for its potential to disrupt the so-called gig economy. But there’s an abundance of unanswered questions about how it will change the way businesses operate.

California Gov. Gavin Newsom signed A.B. 5 into law on Sept. 18 after it swiftly cleared the Legislature. The statute codifies a 2018 decision by the California Supreme Court called Dynamex, which imposed a stricter three-prong “ABC” test on employers looking to classify their workers as independent contractors who have fewer workplace protections than employees. …

The statute also exempts from having to adhere to the ABC test a long list of businesses and occupations, some of which have sunset clauses. Exempted occupations include lawyers, manicurists, licensed insurance agents and engineers.

“It may well be the case that concerns about the gig economy and people working in the gig economy ... was the impetus for the statute,” said Michael Kun, a Los Angeles-based co-chair of Epstein Becker Green’s national wage-hour practice. “But it is not limited to the gig economy. If it were limited to the gig economy, you wouldn’t have had [industry groups] bang on the door the night before it got signed saying, ‘You have to carve out an exemption for us.’“

Here, Law360 looks at a handful of key questions to consider as A.B. 5 approaches implementation next year. …

Will More Industries Score Carveouts?

Kun of Epstein Becker Green noted that A.B. 5 was passed “relatively swiftly” and there were numerous industries lobbying for exemptions “quite literally at the eleventh hour.”

But even though the law is now on the books, that doesn’t mean the industries that couldn’t secure carveouts will give up their efforts. Instead, they might share with legislators the practical impact the law has on their industry as part of future efforts to refine the law, he said.

“Some of these groups were successful at getting exemptions, some of them weren’t,” Kun said. “I think that there is a hope and an expectation that there are going to be more and more exemptions over time. Perhaps not so many exemptions to swallow the rule, but that there are going to be more.”

While many lobbying efforts for exemptions may be aimed at lawmakers, Kun also noted that certain companies, namely those in the ride-sharing industry, might turn directly to voters to seek exemptions through a ballot referendum.

The run-up to such a vote could result in expensive advertising campaigns both for companies seeking the carveouts as well as for proponents of A.B. 5 who oppose the exemptions, according to Kun.

“To the extent that this legislation was enacted in part to respond to the gig economy, it certainly would be interesting if it’s the gig economy companies that end up being exempted from it because of a referendum,” Kun said. “As a California citizen, I have no idea how the vote would come down on that.”