Business of Law

Dynamex Update – California Passes AB 5

By Kristin Tyler
September 17, 2019

Many California lawyers have been closely monitoring the gig economy as it pertains to contract or freelance lawyers since the California Supreme Court decided Dynamex Operations W. v. Superior Court in 2018.  See 4 Cal.5th 903 (Cal. 2018).  If you aren’t familiar with the case, it set forth a new test for establishing when a worker should be classified as an employee or as an independent contractor. 

We’ve written about Dynamex a few times before on the blog, including HERE and HERE.  The ruling in Dynamex created concern across the freelance industry, including for California-based users of LAWCLERK, who understandably wanted to know whether the LAWCLERK model was compliant with California labor laws.

LAWCLERK is the only legal services marketplace built to be 100% compliant with each state’s ethics rules as well as compliant with the provisions set forth in Dynamex.  The California legislature put any concerns about Dynamex and freelance lawyers to rest last week with the passage of AB5. 

At its core, AB5 is groundbreaking legislation which will impede the ability of many companies to claim workers as independent contractors.  In essence, AB5 codified the so-called “ABC Test” set forth in Dynamex and created a presumption that workers should be classified as employees.  Classifying workers as employees triggers a number of benefits for those workers including overtime pay, paid sick leave, worker’s comp benefits and unemployment insurance.   From the employers’ stand point these benefits are incredibly expensive but to the worker they are invaluable.

Now to the important part as it pertains to LAWCLERK and our nationwide network of freelance lawyers. 

AB5 carved out a specific exemption for an individual who holds an active license from the State of California and is practicing in a one of several recognized professions including as a lawyer.  Other recognized professions which were exempted include architects, engineers, private investigators, and accountants.

What does this mean for busy attorneys hiring freelance lawyers through the LAWCLERK marketplace?  If you had any concerns about Dynamex before those should be alleviated with the passage of AB5 and the clear exemption for freelance lawyers.

AB5 goes into effect on January 1, 2020.  It will be fascinating to see how this legislation forces many gig economy companies such as Uber and Lyft to evolve and transform their business models.  Stay tuned. 

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