20 September 2019 #Employment
This week California has signed into law a new piece of legislation limiting the circumstances in which individuals can be classified as independent contractors.
The law (CA AB5) contains some elements which will be familiar to UK HR professionals. It states that individuals delivering services personally cannot be self-employed if they are working under the end-user’s control or if they are not running their own business.
What is novel is that it also states that these individuals cannot be self-employed if the task they are performing forms part of the core business of the end-user.
This law has been mainly reported and debated in relation to lift share services such as Uber. Of course, Uber say that it is not a taxi company but a platform (an argument that has not yet been successful in the courts in this country).
However, it has much wider implications, probably most acutely in the tech sector. A software development company would not realistically be able to argue that an individual software developer it had engaged on a self-employed basis was not delivering its core business.
While this is not part of the legal test for employee status in the UK, where California innovates the rest of the developed world tends to follow.