CEO Message

On Independent Contractor Issues, End of Legislative Session Means Work Begins

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Shortly after the Legislature adjourned in September, Gov. Newsom signed into law one of the year’s highest profile — and most controversial — bills, Assembly Bill 5. This law seriously limits employing workers as independent contractors and requires them to be hired and treated as employees instead.

It was intended to protect workers paid less than the minimum wage who don’t receive benefits or protections in their contracting relationships, but not designed for independent health professionals like physical therapists, counselors, and perfusionists — who earn solid wages and often prefer to make their own decisions about what their working relationships will be.

Now that it has become law, this issue and its far-reaching implications for hospitals and health care employees remain one of CHA’s highest priorities.

For now, it appears hospitals will need to reclassify some of their licensed health care professionals from independent contractors to employees. The law also includes requirements for business-to-business relationships, which means hospitals will need to closely reexamine their service contracts, including registries or other staffing companies.

To help you and your staff make sense of it and the many other labor laws enacted this year, CHA will host a webinar on Oct. 30, and next week we’ll be sharing more details and insight about AB 5.

Before it passed the Legislature, CHA joined a large employer coalition to advocate for changes to the bill, and we made headway toward helping lawmakers understand that eliminating employment choice for health care professionals threatens access to care.

As we presented amendments that would have exempted health care workers, the political environment at the Capitol deteriorated. Other industries threatened lawsuits and initiatives, and the bill’s proponents refused to take any more amendments. The progress we’d made was thwarted.

Despite the negative outcome, the advocacy and education work this year laid an important foundation for what happens next. Many legislators heard that if hospitals can’t call on specialty care professionals such as occupational or physical therapists (because they aren’t employees), hospitals will lose flexibility in responding to quickly changing patient needs.

We also saw wide coverage of our messages in statewide news outlets, and we made a strong statement when nearly 60 health care professionals whose jobs would be directly affected converged on the state Capitol for meetings in 30 different lawmakers’ offices.

We’ll build on that work in 2020 to clarify the use of independent contractors for hospitals and health professionals.

Protecting patients in California by preserving their access to all health care professionals — when and how they need them — is too important to leave uncertain.

— Carmela