Assembly Bill 5 changes California’s freelance economy

On Behalf of | Jan 29, 2020 | Business Law | 0 comments

A big part of business strategy is knowing the laws of the places one is conducting trade. California has a long history of legislating the business environment, from early labor protections to modern reactions to the tech industry.

One of the most recent business laws from Sacramento is Assembly Bill 5, which regulates the so-called gig economy. A lot of people who were working as freelance contractors may need to be hired as full-time employees with access to benefits or drastically scale back what they are able to do.

The purpose of the bill is to prevent shortcuts that businesses would take on their taxes by lowering their liability connected to full-time employees. The law created an “ABC test” to determine if a worker should be full time, which asks about the type of work and how long a person spends doing it for a specific firm.

Small businesses may end up bearing the brunt of this law’s enforcement. Many businesses could not afford to get a lot done with full-time employees because of insurance, benefits and other expenses related to maintaining them. Some people previously relying on contract work to maintain a freelance career may also need to look into other ways to earn income.

Anyone with complicated questions about business law may consult an attorney or retain one over a long period of time. Legal representation can be very helpful for activities in a changing business environment. A lawyer can help protect a business’ interests as California and its municipalities alter their laws to change with the times.