Are golf professionals now ‘employees’ under Assembly Bill 5?

With the looming implementation of Assembly Bill 5, which takes in effect on Jan. 1, 2020, many people in various trades and professions are asking, "Are we now employees?" The new bill limits the use of classifying workers as independent contractors rather than employees, and some trades and industries have unclear guidance as to the ultimate impact the bill will have on their professions. One such profession that is challenged with the current language set forth in AB 5 is the golf professional industry.

Golf professionals often work at driving ranges or golf courses as independent contractors. They typically will rent space from a facility, which only represents a small portion of the facility's gross income at the end of the day. However, under the current language of the AB 5 and proposed language of the new California Labor Code, golf professionals will not be exempt from classification as an employee.

This has wide-ranging impacts on all professionals, as it would potentially result in employers having to provide medical benefits, minimum hourly allocations per day for work, and other benefits typically associated with employment. At first glance, the AB 5 appears to be a "win" for golf professionals, but the re-classification to an employee could result in the loss of tax benefits afforded to independent contractors for money invested into one's trade. As independent contractors, many golf professionals have the ability to control their hours of work, use their own materials for purposes of their trade, are learned professionals who are often certified by the PGA of America, and have their own client books of business and websites for the work they perform.

The bill provides what has been referred to as the business-to-business exemption for certain professions, including lawyers, architects, engineers, real estate agents, licensed barbers or cosmetologists provided they set their own rates and schedule, licensed estheticians, electrologists, and manicurists. Though a golf professional would appear to fall in line with these various exempt professionals, there is no specific exemption carved out for golf professionals. Thus, under the current language of the bill, golf professionals should technically be reclassified as employees.

On Sept. 20, the author of the AB 5, Assemblymember Lorena Gonzalez filed a letter seeking to "clarify the intent" of her bill. She apparently acknowledged the ambiguities the bill has created for various professions. As a practical matter, there are reasons why the business-to-business exemption may be applicable to golf professionals, even though under the current language of the bill, it is not.

One group advocating for an exemption for golf professionals is the California Alliance for Golf. They are advocating that golf professionals fall under the business-to-business exemption. The hope is the language of the business-to-business exemption will be clarified to include golf professionals.

It remains unclear whether AB 5 will apply to golf professionals or not at this juncture. The primary concern is part B of the "ABC test" that was set out in the leading California Supreme Court case Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5 903 (2018). Under part B of the Dynamex test, an individual is only deemed an independent contractor if "the worker performs work that is outside the usual course of the hiring entity's business." This is a gray area for golf professionals because their services are often in line with the driving ranges and golf courses who employ them, as opposed to an incidental service of a larger operation.

AB 5 was intended to target the "gig economy" that has emerged from entities such as Lyft and Uber, but the golf industry has been swept up in the politics of the current changing economy. Golf professionals have enjoyed much autonomy in their craft for years, and the new bill will impact their way of life. The golf professional industry is advocating to avoid the ramifications of a bill that was not intended to target golf professionals, but meant to address the problems associated with an emerging gig economy. Unlike Uber and Lyft, the services of a golf professional are not inextricably and exclusively tied to the golf courses. Driving ranges and golf courses continue to operate their businesses regardless of whether the professionals are providing their services at these facilities. Golf courses still provide tee times, range balls, merchandising, and various other services to its clientele.

The California Alliance for Golf has taken the position that classifying golf professionals as employees is not good for the industry in the long run or good for the game. The same concerns apply not only to golf professionals, but also similarly situated individuals, including tennis professionals, fitness instructors, and others who are part of the California economy.

The expectation at this point is that the Legislature will clarify and provide further exemptions in its 2020 sessions to provide additional guidance to these industries and trades, and to protect them moving forward from being overly regulated under the employment laws of the state of California. 