How the New CA Labor Law (AB5) Could Affect Adjuncts: Part 1
California’s new Assembly Bill 5, signed into law in September 2019 by Governor Newsom, went into effect on January 1st, 2020. The law is designed to regulate companies that hire contract workers to ensure that they receive comparable pay and benefits if their work is similar to regular employees. It aims to reduce the unfair conditions that contract employees are subjected to because they were not considered full employees.
AB5 will directly impact companies such as Uber, Amazon, or Lyft that hire large quantities of contract workers. It will also have a significant impact on colleges and universities who hire large numbers of contract employees, including adjunct faculty. Adjuncts perform many of the functions of fully tenured faculty, but who do not enjoy the job security or benefits. How AB5 will impact adjuncts, is the focus below.
The test
While the law has just gone into effect, there are still many questions as to how to effectively implement it. The obvious question is how do employers differentiate between contract employees from regular salaried employees? To address that, the state is asking employers to apply three tests to determine how the employee should be defined:
Is the contractor free to perform services without the control or direction of the company?
Is the contractor performing work that is outside the usual course of the company’s core business?
Is the contractor customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed?
If the employer can answer yes to all three questions, then they can continue to classify their contractors as independent workers and not employees. It should be noted that the state will consider all people employees who are receiving compensation for work performed…unless the employer can demonstrate otherwise. In other words, the onus is on the employer to prove that contractors are not regular employees.
How the criteria are applied to adjuncts
How does this inform the decision of classifying adjuncts? Are they employees or contractors? As it turns out, this is actually not so clear-cut. Colleges and universities must consider two factors: direct management, and work as part of the core business.
Direct Management
Are Adjuncts managed by the educational institution? This varies considerably by institution and this is also reflected differently according to the employment contracts that adjuncts and their employers have signed.
AB5 will require new contracts to be signed that provide clearer definitions of how adjuncts are managed, evaluated, and if necessary disciplined. If an educational institution wishes to classify adjuncts as contract employees, they will likely need to reduce the direct management of these employees. This will likely result in greater autonomy for the adjuncts but will also solidify the differentiation from regular faculty.
Work as part of the core business
This is where differentiation will become difficult for employers. Adjuncts teach, and the core business of an educational institution is to teach. Honestly, defining the work as outside of the core business of the institution will be difficult.
Before we see this as an automatic on-ramp to a tenured faculty position, I think that AB5 will likely force educational institutions to cull the number of adjuncts that they employ. This isn’t exactly out of malice, but rather the economic reality that most institutions simply do not have the luxury of expanding their budgets to start offering benefits to all their adjuncts. On the other hand, if teaching is a core part of the business, then who will teach the classes?
From what I’ve discovered working at both private and public institutions, the number of adjunct positions is indeed being reduced. They are slowly being replaced with more solidified jobs for a smaller number of adjuncts, or long-term NTT (non-tenure track) positions that will be funded and provided benefits comparable to tenured faculty positions.
AB5 also is not applicable across all institutions. There is a difference between how the legislation will apply to public versus private colleges and universities. I will speak more about this issue in part 2 of this article next month.