California's AB5 Law under fire, nail techs sue state over worker classification – what the law states?
Assembly Bill 5
(AB5), violates the 14th Amendment, as it does not allow nail technicians to work as independent contractors, as reported by MoneyWise.
What is AB5 and Why It Was Introduced
Assembly Bill 5, which was passed in 2019, changed how companies classify workers, as per the report. This came after a 2018 Supreme Court ruling against Dynamex Operations West, which had misclassified delivery drivers as independent contractors to cut costs, which led the assembly bill to form ground rules for who can be an independent contractor, according to the Moneywise report.
Under the new law, workers must meet three conditions to be categorised as a contractor, which include working independently, performing tasks outside the company's core business and offering their services to other clients, as reported by MoneyWise. If a worker does not come under these conditions, they must be treated as employees, with protections like minimum wage, overtime pay, workers' compensation and unemployment insurance, according to the MoneyWise report.
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Lives Turned Upside Down
Pro Nails Association pointed out that the change had shaken up an industry, which has many immigrant employees from Vietnam, and generates about $3 billion a year, reported MoneyWise.
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California Assemblyman Tri Ta (R-Westminster), who is the representative of Little Saigon, said that, "Their lives have turned upside down overnight," and "It is not just unfair, it is discrimination," as quoted in the report.
Vietnamese Nail Techs Say Their Livelihoods Are at Risk
California's AB5 Law's change is not in favour of nail salon owners, and the owner of two Happy Nails & Spa franchises, An Tran, is taking the state to court, arguing the rules impede how salons operate day-to-day, as reported by MoneyWise. Tran explained that turning contractors into full-time employees would mean higher payroll costs, higher insurance and tighter margins for owners, who already deal with overhead costs like rent and supplies, according to the report.
Tran told the LA Times, "We don't have customers all the time. That's going to cost us a lot more to pay them for the downtime when they don't have any customers," as quoted in the MoneyWise report.
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A Fight About Community and Identity
According to the lawsuit, the fight is also about community, as many Vietnamese refugees had started working in nail salons in the late 1970s with the aim to rebuild their lives in America and now, even decades later, that legacy has continued, reported MoneyWise. The lawsuit also pointed out that over 82% of California nail technicians are Vietnamese, and about 85% are women, according to the report.
The attorney for the plaintiffs, Scott Wellman told KTLA 5, 'Vietnamese American manicurists have faced blatant discrimination under California's labor laws, stripped of the same rights and freedoms afforded to others in their industry,' adding, 'If the State of California refuses to fix this injustice, we are prepared to hold them accountable in federal court,' as quoted by MoneyWise.
Low Pay and Health Risks Also Part of the Story
While, worker advocates have highlighted that the lawsuit also points out the deeper issues of exploitation across the industry, as per the report. A UCLA Labor Center report showed that about 80% of nail salon workers earn pay at or below two-thirds of the median full-time wage, more than double the national low-wage rate for all workers and many salons are reportedly concerned about health and safety conditions as well, as per the report.
FAQs
Why are nail technicians suing the state of California?
They say AB5 unfairly does not allow them to work as independent contractors, which threatens their livelihood and community-built businesses.
How are nail salons affected by AB5?
Salon owners now have to treat nail technicians as employees, which comes with higher costs and less flexibility, as per the report.
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