Workers’ Compensation and AB5

In Newsletter Content by Brandon St. Clair

If you are an independent contractor or subcontractor, the cost of your workers’ compensation policy may be affected on July 1, 2020. Assembly Bill 5 (AB5), signed by Governor Newsom last year, takes effect for workers’ compensation on July 1, 2020.

Among other things, AB 5 changes the criteria used to determine whether, by law, a person who performs work for you is an employee or an independent contractor for insurance, tax, and all legal purposes.

If you believe your workers are independent contractors rather than employees, and it is later determined they are employees based on the new Labor Code created by AB 5 (Labor Code section 2750.3), insurance companies will include their compensation when calculating your final premium beginning July 1, 2020, as required to do so by this new law. This may result in an increase in the final cost of your policy.

The sooner you grasp AB 5, the better you can manage its potential impacts for your business. We urge you to use the resources below to educate yourself on these matters.

If you have additional employee payroll to report based on AB5, contact us here at TIS. The sooner we know of additional payroll, the longer the insurance company will have to spread any resulting price increase across your remaining payments. This will help you avoid having to pay the entire amount all at once when your policy ends.

We look forward to serving you and are here to assist you with any necessary adjustments to your policy.

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