A San Francisco Superior Court Judge has just ordered Uber and Lyft to stop classifying its drivers as 1099 independent contractors. This ruling further upholds California's sweeping Assembly Bill 5 employment classification set of rules signed into law by Governor Gavin Newsom in September 2019.

This law went into effect on January 1st of this year, and it requires companies engage in a strict test with multiple elements if they want to classify a worker as a 1099 reportable contractor and not a W-2 reportable employee. This test is a three-pronged test in determining whether to classify workers as employees or independent contractors. This test assumes that workers are employees unless the company that hires them can prove the following three things.

1. The worker is free to perform services without the control or direction of the company.
2. The worker is performing work tasks that are outside the usual course of the company’s business activities.
3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

This means workers previously classified as 1099 reportable will be entitled to a minimum wage, expense reimbursements, employee benefits, rest breaks, and the other benefits afforded to employees under California state law This test thus holds companies to a higher standard in proving workers are independent contractors than was previously used in California and will likely become a national model for other states dealing with these issues.