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News & Press: CalAdvisor Newsletter

Legislative Update

Friday, February 1, 2019   (0 Comments)
Posted by: Shari McHugh and Marc Bregman, LUTCF
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Putting your membership to use. Political advocacy is the main benefit of membership, use it! Come make a difference in the industry and get involved with telling your legislators who you are, who NAIFA is and what is important to your clients that you represent.

Upcoming Events:
Day on the Hill I March 27 I Sutter Club; Sacramento

Congressional Conference I May 14-15 I Washington D.C.

Legislative Session Convenes
The 2019-20 legislative session has just begun, and already relevant policy discussions on health care and worker classification are underway. Shortly after being sworn into office, Governor Gavin Newsom announced his ambitious plans to tackle the state's healthcare needs. NAIFA‐California will continue to monitor the Governor’s actions and we are looking forward to working with the new Administration, as well as state lawmakers, on viable solutions that will not destabilize the health insurance marketplace.  Additionally, NAIFA‐California has been working to limit the application of a recent CA Supreme Court ruling, the Dynamex decision, that could change many 1099 contractor relationships into W-2 employees.

Governor Gavin Newsom campaigned on a universal healthcare platform and has said that the issue is among his top priorities. In his first act, he announced a package of health care proposals. The package included sweeping reforms addressing access to health coverage for undocumented adults, drug prices, the high cost of health care and more. Specifically, Newsom signed an executive order to consolidate the state’s prescription drug purchases into a state-run program. Further, in his budget, Newsom proposed extending Medi-Cal eligibility to undocumented young adults who otherwise meet the program’s eligibility requirements. He also wants to expand the Affordable Care Act’s financial assistance to middle-income families, helping them afford health care premiums. Further, Newsom sent a letter to Congress and the White House asking for federal law to be amended enabling states to apply for and receive “Transformational Cost and Universal Coverage Waivers.”

As these conversations develop, NAIFA‐California will advocate on behalf of its members to ensure that choice, quality, competition and access to professional service be a part of any health care reform effort.

Dynamex Decision
NAIFA‐California has been working with others in the insurance industry on legislation that would permit licensed insurance agents and brokers to continue to choose whether they wish to work as employees or as independent contractors.  

You may recall that the recent ruling by the California Supreme Court in Dynamex Operations West v. Superior Court (“Dynamex”) created a new worker classification standard.  The new standard referred to as the “ABC Test,” is far more rigid than the previously used scheme to determine whether a worker is an independent contractor or employee. To qualify as an independent contractor, an employer must now prove all of the following:

A. That the worker is free from the control and direction of the hirer in the performance of the work; and

B. That the worker performs work outside the usual course of the hiring entity’s business; and

C. That the worker is customarily engaged in an independently-established trade, occupation or business of the same nature as the work being performed for the hiring entity.

Depending on how broadly that language is interpreted, the decision can impact you as an agent/advisor; affect independent contractors you hire, and even agents whom you partner with on business. Imagine a world where you are now a W-2 employee for every single insurance carrier you’re contracted with? How could this negatively affect your commissions, ability to serve clients, ability to work independently and impact your tax reporting and deductions?

In response, NAIFA-California and other insurance trade groups encouraged Assembly Members Cooley and Daly to introduce AB 233 clarifying the application of the decision and providing greater flexibility for insurance agents. NAIFA‐California has also begun meeting with stakeholders to explain the need for the bill and educating the Capitol community about the unique nature of the insurance industry.  

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