The first few months of the 2019 legislative session opened with bills that would expand the definition of “employees” to include Uber and Lyft drivers, attempt to nullify utilization review, make nonindustrial apportionment more difficult to obtain, and investigate the large number of independent medical review disputes.

John P. Kamin

Each and every spring, Californians can count on warmer weather, the return of baseball, and the revival of long-simmering political fights in Sacramento at the start of the legislative session. This year, our lawmakers have not disappointed us, so grab your popcorn because it’s going to be a long legislative session in the state capital.

Assembly Bill 5 will be the bill that will undoubtedly get the most attention because it’s a question that everyone can relate to: Should your Uber or Lyft driver, or Postmates delivery person, be an employee or an independent contractor? In other words, should the state force these massive “gig economy” businesses to deem their labor force to be employees, which would require workers’ compensation coverage and other benefits traditionally afforded to employees?

The bill is based upon the California Supreme Court’s April 2018 decision in Dynamex v. Superior Court, where the court created the “ABC test” to determine whether a worker is an employee or an independent contractor. The test makes it easier for a worker to be deemed an employee, and not an independent contractor.

However, the test also conflicts with the longstanding “employee or independent contractor” test that we’ve been using in the workers’ compensation system for years, which is a multifactor test set forth by the 1989 state Supreme Court decision in S.G. Borello & Sons Inc. v. Dept. of Ind. Relations.

Later in 2018, the Workers’ Compensation Appeals Board issued a slew of panel decisions clarifying that the S.G. Borello & Sons is still the test to be used for workers’ compensation purposes. Assembly Bill 5 would essentially override these recent panel decisions and codify into California law that the ABC test is the one to be applied to everyone affected by the Labor Code, including the workers’ compensation system.

If your initial answer is “Yes, the gig economy workers should be employees,” then expect prices to go up, because many of these businesses are now publicly traded, and their shareholders will demand that the profit margin continue to deliver dividends on top of all of those new workers’ compensation premiums and other requirements to those employees.

Currently, using your local gig economy profiteer to get some cold ice cream delivered on a warm spring day costs about $12-$20, depending on tip, location and drive time.

But if demand declines, then the gig economy workers suffer. Less demand means fewer deliveries and more sporadic tips. Suddenly, that side hustle stops looking so profitable to everyone on the supply chain.

The California Chamber of Commerce attempted to add a poison pill to the bill by demanding that lawmakers exempt it from applying to taxi drivers, gig economy workers, engineers and lawyers. Assemblywoman Lorena Gonzalez, D-San Diego, refused, stating that the chamber’s demands were too broad.

Alas, this leaves the bill headed out to the turbulent waters of the California Legislature, where the Assembly Appropriations Committee will review it next. If that committee gives the bill the thumbs up, then it will go up for a full Assembly vote, and then be on its way to the Senate.

Should the bill reach Gov. Gavin Newsom’s desk, I suspect he’d be tempted to sign it because he mentioned securing more rights for the gig economy workers during his campaign. But there are still a lot of amendments and lawmaking to be done before that would happen, so the chances of today’s bill reaching Newsom’s desk in its current form are pretty low.

Other bills

Some of the other pending bills that have attracted our attention are:

• Assembly Bill 1107, which would bar utilization review on requests from a medical provider network physician. It would also bar previously approved treatment for applicants with a “serious chronic condition" unless the defendant could establish that the applicant’s “circumstances or condition” has changed since that last treatment was authorized. I am skeptical that this bill will pass this legislative session, largely because this would promote a sea change in the workers’ compensation system. For instance, group health insurers still require their in-network physicians to go through utilization review, so why should workers’ compensation system be any different? Another reason to be skeptical is that the usage of the language “change in the employee’s circumstances or condition” is vague and subject to litigation. Remember, the whole purpose of the UR/IMR system was to reduce the amount of litigation in our already-crowded workers’ compensation system.
• Senate Bill 537 would require publication of a number of details about physicians online, including how many applicants they’ve treated, their most common billing codes, their UR approval/modification/denial statistics and number of IMR decisions. The purpose of this bill is to examine why there are still so many IMR disputes. As a side note, this bill would also bar MPNs from altering a treatment plan or bill without first consulting with the treating physician. That side note raises the following question: Don’t the network contracts that the physicians sign to join the MPN specifically mandate network-driven discounts? And what about providers with a small number of patients? Aren’t there privacy concerns about their treatment being posted online? I suspect this bill will need some amendments if it has hope of surviving the legislative session.
• Senate Bill 731 would bar doctors from considering the following when apportioning disability to nonindustrial factors: race, religion, color, national origin, age, gender, marital status, sex, sexual identity, sexual orientation or genetic characteristics. Prior Gov. Jerry Brown routinely vetoed bills like this because he felt that they threatened to make employers liable for nonindustrial conditions. In other words, if a condition is nonindustrial, why should an employer be liable for it regardless of its source? Now that Brown’s no longer in office, this bill could help us determine where Newsom stands on the issue.

John P. Kamin is a workers’ compensation defense attorney at Bradford & Barthel’s Tarzana location. He is WorkCompCentral's former legal editor. This entry from Bradford & Barthel's blog appears with permission