Governor Signs AB5 Into Law ⁠— Reshaping California's Independent Contractor Classification Landscape

Businessman signing document

Businesses with workers not falling under one of the exemptions of AB5 will be at an increased risk of claims of misclassification.

December 2, 2019
Eric C. Sohlgren & Matthew C. Lewis - Payne & Fears Legal Alert

Today, Governor Gavin Newsom signed California Assembly Bill 5 (“AB5”), controversial legislation which will have a substantial impact on California employers when it goes into effect on January 1, 2020.

AB5 enacts into a statute last year’s California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018), and the Court’s three-part standard (the “ABC test”) for determining whether a worker may be classified as an employee or an independent contractor.

Under the ABC test established in Dynamex and now under AB5, a worker may be properly considered an independent contractor only if the hiring entity establishes all three of the following: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; (B) that the worker performs work that is 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 performed for the hiring entity.

Reprinted courtesy of Eric C. Sohlgren, Payne & Fears and Matthew C. Lewis, Payne & Fears
Mr. Sohlgren may be contacted at ecs@paynefears.com
Mr. Lewis may be contacted at mcl@paynefears.com



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