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70 and embrace the opportunity for reinvention that is compatible with the modern changes taking place in America's workforce. THE LAY OF THE LAND e United States has experienced the longest period of sustained economic growth in several generations due to innovative business models that combine ideas, technology, and talent to create something new. Many of these business models did not exist prior to the recession of 2007–2009. Businesses have adopted machine learning, artificial intelligence, and robotics to increase efficiency and spur growth. Today's economy enjoys conveniences and on-demand functionality that are different than just a few years ago. is new paradigm is called the "gig economy." Central to how the gig economy works is how labor is managed. States such as California and Massachusetts are leading the way in defining this new economy. Assembly Bill 5 in California addresses a complicated question with a simple three- pronged test. e question is whether a person doing a task is to be classified as an employee or as an independent contractor. e answer addresses every element of labor and employment law including hours of work, wages, income tax, unemployment insurance, workers' compensation, and mandatory sick leave. is ABC test, as it has been called, looks at autonomy (Prong A), meaning the worker must be free from "control and direction" by the employer over how and where they do the work. Secondly, the worker must perform work outside the employer's "usual course of business" (Prong B). Finally, the worker needs to operate as "customarily engaged in an independently established trade, occupation, or business" (Prong C). e PPBO's vendor agreement must prove all three prongs. Penalties can be severe. Employers who incorrectly classify workers must pay the unpaid state income tax, unemployment insurance, and disability insurance that it would have paid were the contractor an employee. e IRS can charge back FICA and payroll taxes. California intends to collect an estimated $7 billion annually from businesses that have evaded paying these payroll taxes. is legislation is guaranteed to start a national debate over how industrial era labor laws need to be rewritten to reflect 21st century nuances and concerns. How prevalent is independent contractor misclassification? e New York Labor Department completed more than 12,000 audits and investigations in 2014, resulting in more than $40 million in unpaid unemployment contributions. Similarly, Massachusetts audited more than 18,000 businesses in its last reported year and recovered $15.6 million from companies found to have misclassified independent contractors. In 2004, Massachusetts passed legislation that mandates the ABC test. Since then, the state has seen a lot of litigation over Prong B, the "usual course of business" rule, and it's still not clear where the Prong B line is drawn. As a result, some companies have ceased doing business in the state and others have turned to hiring companies that have their own employees rather than individuals who may not meet the test. e Massachusetts statute is over 10 years old and never anticipated the gig e focus on the gig economy has obscured the more widespread impact of the new law in traditional businesses, perhaps such as ours, where workers have been misclassified for years.

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