Governor Gavin Newsom signs labor bill AB5

On Wednesday September 18, Governor Gavin Newsom signed into law Assembly Bill 5, a sweeping new labor law re-defining the distinction between “employees” and “independent contractors.” The bill codifies and expands upon the California Supreme Court decision in Dynamex, which established the three-part “ABC test” to determine a worker’s status.

We previously wrote in our newsletter about the potential implications of Dynamex and the ABC test on future labor legislation including AB5. The three points of the ABC test determining employment status are that a worker is an employee if:

A. The worker performs tasks under the company’s control,
B. The worker performs tasks central to the company’s business, and
C. The worker does not routinely perform the same tasks as an independent enterprise

Many professions sought exemptions from AB5, but only some got them. Those professions largely got exemptions due to typical practices of negotiating directly with clients and setting their own prices, and some of the exemptions come with sets of conditions that must be met, including pay basis and autonomy.

The bill takes effect January 1, 2020. A November 2020 ballot initiative will seek to create a new category of workers, independent but with some benefits and a wage floor.