Wilderness Guides & California’s AB 5 “Gig Work” Bill
Are big changes on the horizon for California’s outdoor adventure industries?
California’s Assembly Bill 5, signed into law, by the Governor on September 18, 2019, goes into effect on Jan 1, 2020. California AB5 is based on the April 2019 California Supreme Court’s “Dynamex” decision. This new law essentially rewrites the factors that can be used by organizations and employers to classify individuals as independent contractors or whether these individuals are in fact, employees. Originally aimed at large “gig” industries like Uber, Lyft and DoorDash in response to lawsuits, this new law- as an unintended consequence- will have a far reaching impact on the outdoor industry and other wilderness based professions.
For years, organizations providing guided outdoor adventure activities such as rock climbing, skiing, hiking, backpacking, whitewater rafting, horseback riding, and numerous other outdoor adventure pursuits have relied on the use of individuals working as independent contractors to perform these services. Often these individuals travel seasonally, following the work and activities offered in different regions of the State. For example: it is not uncommon for a guide to work in the summer trekking in Yosemite, the winter skiing in the Rockies, and the fall and spring hiking and rock climbing in Joshua Tree. While some organizations do hire these individuals as “seasonal” employees, many are hired as independent contractors who are paid by the day, job or trip.
This is understandable as the nature of outdoor wilderness work makes it very difficult to structure wilderness jobs based on traditional employment models with regular hours, specific job descriptions and tasks. Outdoor adventure trips & tours can last for hours, days, and even weeks and involve a multitude of required outdoor skill-sets. How does one structure hourly pay for an individual spending 24 hours a day backpacking the wilderness for a week at a time? Some trips can be shorter or longer depending on a number of factors outside of the guides or organizations control. Things like weather, guests abilities, and physical fitness can all impact timelines. A trip scheduled for 6 hours can easily become eight or even 10 hours; should an illness or injury occur, this timeline can become even longer. So, it is no surprise that the outdoor industry has long depended on guides being classified as independent contractors for the conduct of these activities. Not to mention, many of these organizations are small businesses that operate only as trips are requested and with schedules that can vary widely throughout the year, based on consumer demand. However, California’s new law may bring sweeping and possibly untenable changes to this industry.
What does the new law state?
The Supreme Court of California ruled that the following three factors, referred to as the “ABC” test, must be used in determining status. According to the bill, ALL three factors must apply if an individual is to be classified as an independent contractor:
(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact
(B) The person performs work that is outside the usual course of the hiring entity’s business
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
The key factor that most guiding organizations will not be able to work around is (B) which basically states that, “anyone performing work for a company that is the same as the business of that company is presumed to be an employee”.
Full text of the bill can be found here: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB5
The new law does provide exemptions to many specialties and professionals however, outdoor guides and tour operators are not ( at least currently ) listed as exempt from the laws provisions. This prompts the question: How will wilderness organizations comply with the new law, without suffering revenue losses? It is likely that many small organizations will be unable to afford the financial burdens of the law which require businesses to provide unemployment insurance, workman’s compensation, overtime pay, paid leave and in some cases health insurance to employees; all of which can amount to a 30% increase in expenses plus paying the 6.2% of employee taxes. As such, many may be forced to close their doors, especially considering that the fine for non-compliance can be as much as $25,000 per individual wrongly classified.
Are there ways for organizations to continue classifying guides as independent contractors?
Yes, however the requirements to do so may place a large financial and administrative burden on those individuals who would choose to remain independent contractors. Under the law, these individuals must have their own businesses, licenses, permits and insurance to continue being classified as such.
It is likely that challenges to this law will ensue and in fact, many are underway. What the final outcome will be is likely many years down the road. Until then, outdoor adventure organizations will need to look at reclassifying their workers or continue operating at the risk of lawsuits, labor disputes and fines.
Written by Kelly Crawford
Kelly is the CEO of Joshua Tree Excursions. A private, concierge, outdoor adventure company based in Joshua Tree, CA. They specialize in private, customized hiking, camping, rock climbing, and backpacking trips in Joshua Tree National Park and the surrounding Mojave Desert.