Executive Summary
The California Senate has amended AB5 one last time before coming to a floor vote. While several of the amendments are superfluous purpose statements and findings, technical changes that have no objective impact on the law, and small clarifications regarding individuals who were already covered or carved out from the bill (i.e., licensed manicurists), there are two notable additions that incentivize union bargaining and provide a right of action by various public entities. Unfortunately, no carve out for franchising has occurred and it is unlikely that one will occur prior to a floor vote.
Analysis
On September 6, 2019, the California Senate once again amended AB5. While there were many additions to the bill in multiple sections, two notable additions occurred (identified in italics below):
Section 2(b)(2): A physician and surgeon, dentist, psychologist, or veterinarian licensed by the State of California … performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, or professional corporation … Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licenses identified in this paragraph.
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Section 2(j): In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
Looking Forward
If passed, AB5 will provide incentives for professional industries to enter into collective bargaining agreements as a way to avoid misapplication of Dynamex and it will provide a right of action for various public entities to pursue injunctive relief against entities they believe are misclassifying employees. While the latter is odd given it is well-settled that misclassification cases have a remedy at law available–damages in the form of backwages–the former provides a labor friendly carve out that is sure to become a “solution” for other industries seeking to avoid misclassification litigation. Simply stated, these changes are unfortunately far afield from either the Supreme Court’s decision in Dynamex or the original AB5 drafters’ intent that it codify Dynamex and clarify its application.
This article was originally published on the California Franchise Network.
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Thomas O’Connell – Tom O’Connell is a Shareholder at Buchalter APC, where he serves as Chair of the firm’s Franchise Law Practice and Chair of Litigation for the firm’s San Diego office.
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