On January 1, 2020, California’s new labor law AB 5 took effect, providing minimum wage protections to some, but not all, freelance workers. A freelance worker must be paid minimum wages when classified as a “full-time employee” under California law. If a company does not, the person can file a wage claim and pursue other protections under California law.
Freelance Worker
Freelance workers usually work on a contractual basis. They are self-employed and provide services to many clients and companies. Freelance workers are not covered by California’s wage and hour laws. Before AB 5, many freelancers were excluded from traditional employment benefits, including minimum wage protections, meal and rest breaks.
AB 5 is the abbreviated name for Assembly Bill 5, which now requires most companies to classify contractors and freelance workers as “full-time employees.” The change of status to an employee means that a freelancer worker is treated as such, with eligibility for benefits, guaranteed $12 to $15 state minimum wage, and other protections under California State’s employment law.
California Test to Determine Classification an Employee and Wage Protections
Only certain freelance workers who are determined to be “full-time employees” are entitled to minimum wage protections. Under California’s AB5, anyone who provides labor or services for pay must show that they aren’t considered an employee under the law. In other words, the law in California assumes that a freelancer is an employee and entitled to wage protection.
In a subsequent bill, AB 2257, some freelance professionals were excluded as “full-time employees.” AB 5 prohibits certain freelancer workers from being designated as “full-time employees.” Examples include architects, doctors, insurance agents, lawyers, grant writers, real estate agents, tutors, truck drivers, and manicurists. Being designated freelance workers means they cannot avail themselves of California’s wage and hour laws.
But what about freelance workers such as interpreters, musicians, event planners, and other freelance workers?
Freelance workers who fall into these categories will be considered full-time employees and hence will be designated a full-time employee under the law with all those protections. That means that these freelance workers must show that they are not “full-time employees.”
The “ABC Test” is used to determine this classification. In order to be considered a freelancer, the freelance worker must demonstrate all three elements:
- (A) Autonomy. How the worker performs must be free from the control and direction of the employer.
- (B) Business Dissimilarity. The worker performs labor or service outside the usual course of the hiring entity’s business.
- (C) Custom of the Worker. The worker must be customarily engaged in an independently established trade, occupation, or business of the exact nature as that involved in the work performed.
When a Freelance Worker is Not Treated as an Employee
The proper classification of freelance workers or employees matters. Freelancers are not covered by California’s wage and hour laws. However, an employer cannot get around California’s labor law protections by making a freelance worker sign an agreement that they are in fact a freelance worker.
If the AB 5 law requires that a freelance worker be treated as a full-time employee, then all those protections take into effect. Suppose a freelance worker/employee believes they weren’t paid a minimum wage when they should have been. In that case, they have a claim under California labor laws.
The freelance worker/employee can file a “wage claim” with the California Division of Labor Standards Enforcement (DLSE), or they can file a lawsuit in court. The DLSE has the ability to decide many issues that involve a wage claim. The Labor Commissioner can hold a hearing on an employee’s complaints regarding unpaid wages, failure to pay minimum wages, and failure to pay overtime.
A freelance worker/employee can also sue the company in court. If the freelance worker/employee decides to take this route, then they request a “right to sue letter” from DLSE and bypass the Labor Commissioner’s jurisdiction and proceed directly to a court.
Misclassification as a Freelancer?
In the event that an employer or company has misclassified you as a freelancer instead of a “full-time employee,” California law enables you to enforce your rights. As a full-time employee, you would be entitled to overtime pay and meal/rest breaks. California law also provides penalties for misclassifications, which you could be entitled to.
Our employment law attorneys at SANFORD A. KASSEL, A Professional Law Corporation, can help you bring forward an employee misclassification lawsuit against the employer to sue for compensation that was wrongfully denied to you.
