Article Date:
April 2020

Word Count:



Does California’s AB 5 Turn Your Contractors into Employees?

The new California AB 5 law is upsetting to both (a) employers, and (b) independent contractors, for the following reasons:



Employers who hire independent contractors save on Social Security taxes, Medicare taxes, employment taxes, unemployment taxes, and paid vacation and other time off, and can avoid a host of workplace rules.


Independent contractors enjoy workplace freedom, can deduct their business expenses, can set their own hours, and can generally put away as much as they desire into their solo 401(k) accounts.


AB 5, by law, simply makes many independent contractors W-2 employees. Employers lose their advantages. Independent contractors lose their advantages.


Now, don’t think this AB 5 independent-contractor-to-employee displacement affects only businesses located in California.


Think of the company that had 45 independent contractor sales reps, three of whom were in California. So that all sales reps would be treated the same, the company converted all the traveling sales reps to employees, who now suffer as does the individual in Dynamex Causing Incorrect W-2 Classifications for Independent Contractors.


And then there’s the problem of the camel’s nose. ... Log in to view full article.

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