Each year, hundreds of new California, federal and local laws go into effect, and 2020 is no exception. Among the most significant is Assembly Bill 5, which will change labor laws to reclassify many independent contractors – most notably drivers for ride-sharing services such as Uber and Lyft – as regular employees. And there’s a minimum wage hike, too.
Here’s what you need to know about the new business laws taking effect in 2020.
Are You Still An Independent Contractor?
From writers to Uber drivers to hairdressers, hundreds of thousands of Californians are independent contractors. And during the 2010s, many businesses relied on this employment arrangement as crucial to their business models.
The new law, AB 5, reclassifies “gig” workers as regular employees unless they are free from the control and direction of their bosses, perform work outside the usual course of business, and are customarily engaged in an independently established business of the same nature as that of the work involved.
That’s called the “ABC Test” and some of it might be open to interpretation. But what is clear is that the majority of independent contractors – as many as 64% according to one study – are now employees. That means they have to be paid at least minimum wage and only have to pay the worker’s share of taxes.
Understandably, a lot of employers aren’t happy about these changes. Foremost being Uber, Lyft, Instacart, DoorDash and Postmates, which have built their business models around using independent contractors.
But a lot of freelance writers and photographers aren’t happy either. It could mean that the gig is up for them!
Things aren’t set in stone, and officials have expressed willingness to tweak the law. And there’s likely to be a ballot measure this November asking voters to weigh in. But as it stands now, talk to your boss and a tax professional if you were in an independent contractor relationship in 2019, as it might be different now.
Minimum Wage Goes Up … Again
Combined with the changes to independent contracting law, the $1-per-hour rise in California’s minimum wage might make it seem like the Golden State is becoming a haven for workers’ rights.
If you work for a company with more than 26 employees, you’ll need to be paid $13 per hour as of Jan. 1. Establishments with 26 or fewer workers may pay $12 per hour.
The increases are mandated under a 2016 law that gradually raises the wage to $15 per hour for nearly all California workers by 2023 – unless there’s a recession. That’s because, in a nod to employers, the law allowed for a freeze in the wage hikes if the economy goes south.
Corporate Diversity: Should the State Mandate Who’s on Boards?
Senate Bill 826, which goes into effect at the end of January 2020, requires publicly traded companies based in California to have at least one woman on their board of directors. By the end of 2021, however, the requirement will jump to two women on every board with five directors and three for every board with six or more directors.
The law is designed to increase diversity and female representation in corporate California. It’s the first such statute in the United States but follows similar policies in several European nations.
A number of conservative groups have vowed to challenge the law, claiming undue interference in private business operations. But it might soon be a moot point. Out of 650 impacted companies, 168 had all-male boards back in 2018. Today, there’s only 32 noncompliant businesses.
- Mandatory arbitration – in which employees and others have to resolve disputes through private processes rather than open court proceedings – are all the rage in the business world today. But a state law going into effect on Jan. 1 prohibits firing or threatening employees who refuse to sign forced arbitration agreements. But it doesn’t impact those agreements that are already in effect.
- Are you the victim of discrimination, harassment or retaliation in the workplace? In 2019, workers had a year to file complaints in court. Now the deadline is three years, thanks to a state law taking effect on Jan. 1.
- There are about 40,000 private family day-care providers in California, but they aren’t covered by federal labor laws. Thanks to a new state law, they now have the right to collective bargaining. That’s likely to improve their wages and work conditions.
- Are your cosmetics tested on animals? If so, you can’t sell them in California in the new decade according to a new law. All alligator and crocodile products are also banned. But Louisiana, which makes a tidy business in the allicrocodile product space, is suing to block that law, since California is such a large market.
- New homes must install solar panels, according to a new law that is aimed at limiting greenhouse gas emissions. However, those rebuilding from a wildfire or other disaster are exempt. And environmental review processes are also temporarily suspended for rebuilding efforts in the 2018 Camp Fire zone in Northern California. Government license fees for businesses can also be waived for those experiencing wildfire hardships.