Ca. Litig. Rev. 2019

Employment Law: A Deep Dive Into AB 5

By Kathleen A. Brewer

What Do Physicians, Architects, Manicurists, Attorneys, Photographers, Cartoonists, Dentists and Dog Walkers Have in Common? Determining Their Status as Employees or Independent Contractors Is Not as Easy as A-B-C. In 2019, the California Legislature tackled the thorny job of deciding how to determine when a worker is an independent contractor rather than an employee. Assembly Bill 5,1 introduced by Assemblymember Lorena Gonzalez as a measure to protect exploited workers, served as the lawmakers’ canvas. Initially, the bill embraced a simple test for determining independent contractor status and subjected nearly all employment relationships to that test. Industries reliant on independent contractors clamored for exceptions. The result? A bill cluttered with occupation-specific exemptions and labyrinthian tests that, although unwieldy, does provide vital statutory guidance. Because of its complex approach to determining independent contractor status, AB 5, which became law on January 1, 2020, warrants a detailed examination.

The ABC Test – Labor Code section 2750.3, subdivision (a)

AB 5 began as an effort to codify the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court.2 The Dynamex court adopted a simple "ABC" test for determining whether a worker is an employee or an independent contractor. Under the ABC test, as now codified in Labor Code section 2750.3, subdivision (a), "a person providing labor or services for remuneration is presumptively an employee rather than an independent contractor unless the hiring entity demonstrates that the worker:

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