Employers beware of increased employee taxes and Workers’ Comp premiums!
AB 5 signed into law by the Governor effective 1/1/20 states that an individual is presumed to be an employee unless the employer can prove with a three-pronged “ABC” test that he/she is an Independent Contractor. The burden of proof falls on the hiring entity.
The Governor’s proposed 20-21 Budget includes “$17.5 million and 103.5 positions in 2020-21 to 2022-23, funded by various special funds, to implement Chapter 296, Statutes of 2019 (AB 5) and to address increased investigations of worker status, wage claim filings, and workplace health and safety inspections.”
The Governor’s Budget Summary indicates $780,000 for the “Department of justice to address increased enforcement actions and to prosecute cases involving misclassification of employees as independent contractors.”
In addition, EDD is allocated an additional proposed $3.4Million to “train staff and administer the ABC Employment Test, and to conduct hearings and investigation of worker status.”
The AB5 debate goes on… 2 new bills introduced January 16, 2020:
AB1928. Proposes going back to 1989 “Borello” test for Independent Contractors
AB1925 Proposes exempting small business from AB5 test. Those with less than $15M in gross receipts over the last 3 years, and less than 100 employees will revert to the Borello test.
2020 is shaping up to be a challenging year for employers in California. Along with the increase in the minimum wage are the following new laws.
Potential reclassification of 1099s to W2s.
AB 1804: More stringent reporting requirements to Cal-OSHA (including adding the employee’s SSN when reporting)
AB 1805: Expanded definitions of “Serious Exposure & Serious Injury/Illness” from which to categorize inspections and citations
Funding to increase the number of Cal-OSHA enforcement officers and state investigators to pursue safety inspections/violations and reclassification of 1099s to W2s, respectively
Ultimately this can potentially translate into higher taxes in employment and Work Comp premiums and a more pervasive Cal-OSHA.
So…. why now a safety program? Reduce your risk exposure and ultimate costs with guidance from the ESM team of Risk Management professionals.
Read more from the Labor Commissioner’s Office of the Department of Industrial Relations