Ag working out impact of AB5

While there’s more uncertainty than clarity, those in agriculture are figuring out what CA’s new employment standards mean for their industry

By Kaitlin Washburn

@kwashy12

CENTRAL VALLEY – As of the beginning of this year, a landmark employment law aimed at wrangling in the gig economy has changed how California classifies independent contractors and employees.

Under Assembly Bill 5, if someone does work for a business that is a part of a company’s core purpose, that worker must be treated as a full-time employee. The intention of these new employment rules, established by a 2018 California Supreme Court ruling, is to ensure workers receive the protections — minimum wage, health insurance, paid sick days — that full-time employees are guaranteed in California.

California businesses are figuring out how to operate under the new employment standards, including those in the agriculture industry. Growers in particular rely on contracts for different services, such as labor contractors, irrigation specialists, pest control advisors, etc.

“I don’t think anyone really knows what the full implications are for AB 5,” said Bryan Little, the director of employment policy for the California Farm Bureau Federation. “The new test is a very narrow and specific fit that complicates how someone can do business.”

The 2018 court ruling, also referred to as the Dynamax decision, established the “ABC” test. The test is used to determine if someone doing work for a business should be deemed an employee. Unlike full-time workers, businesses don’t have to provide benefits to independent contractors, such as paying minimum wage and offering health insurance.

To remain independent from a business, a worker must meet all three of the following perimeters: A worker’s contract dictates that to do the expected job, they must be free from a company’s control and direction, the work done is separate from the core purpose of a business and the individual is doing work as an employee for a separate, established organization.

Luckily for agriculture, the business-to-business option protects many of the industry’s business relationships, Little said. For example, a grower can continue to use the services from a pesticide application company or a labor contractor.

What remains unclear are the arrangements between an individual without a business license and a grower who relies on them for short-term and irregular work. The rule makes it difficult for smaller growers who can’t afford to classify someone as a full-time employee, Little said.

“If you have a guy who comes on the farm to do work for only a couple days out of the year, a grower shouldn’t have to make them a full-time employee,” Little said. “AB 5 creates a very rigid rule and there are a lot of unique employment relationships within the industry. It’s so rigid that there are a lot of legitimate businesses that won’t be able to continue under AB 5.”

Ryan Jacobsen, the director of the Fresno County Farm Bureau, has done what he can to educate growers about what the new standards mean for them.

“It’s not a secret that AB 5 has been full of unintended consequences. It was meant to deal with the gig economy and has unintentionally thrown a lot of businesses in jeopardy,” Jacobsen said.

AB 5, which was heavily supported by unions, has sparked outrage from businesses and independent contractors throughout the state. There have been discussions about amending the language of the law, which Jacobsen said is sorely needed.

“More and more, AB 5 requires some clean up to the language,” Jacobsen said. “The uncertainty and the unknown has caused a lot of concerns.”

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