Prepared Legal Corp.
AB5 Impact on Paralegal Services
The implications of AB 5 are far reaching beyond the intended gig business targets. We’ll see what the new year brings for independent contractors in the legal services industry. California Assembly Bill 5 (2019) took effect January 1, 2020. The bill was introduced by California assemblywoman Lorena Gonzalez then was signed by Governor Gavin Newsom on September 18, 2019.
Many California Freelance Paralegals have already felt AB5's impacts. While Lawyers are exempt from Labor Code §2750.3, Paralegals are not. What does this mean? In scenarios where the ABC Test (which is based on Dynamex) would be used to determine whether a Paralegal is an independent contractor or employee instead Borello would be considered which is far more complex.
Both the Borello test and the ABC test assume that the worker is an employee and the hiring entity must prove that the worker is an independent contractor.
Under Borello, no single factor determines whether a worker is an employee or an independent contractor. So to say doing business as a sole proprietor would be enough to rebut the presumption based on a B2B exemption is not solid enough for me. More importantly, would it be enough for the lawyer you’re hope to contract with.
An inescapable factor considered under Borello is the degree of control and direction required in the Lawyer-Paralegal relationship. BPC §6450 et seq. clearly spelled out, Paralegals perform all services under the direction and supervision of an attorney.
Another factor is whether the work is a regular or integral part of the employer’s [lawyer’s] business, which obviously it is.
Remember, the point of AB5 is to impose an employer-employee relationship. Borello is a “multifactor” test which requires consideration of all potentially relevant facts in the determination whether an exemption exists. No single factor controls.
It is my humble recommendation that LDAs support Freelance Paralegals.
Sacramento County LDA Reg. 2020-03, Exp 08/04/2024
Author: Angela Grijalva
Just another entrepreneur "Tryin' to make a dollar out of fifteen cent," and making a difference.