As many employers know, Assembly Bill 5 (aka AB 5) went into effect on January 1, 2020. For those not in the know, AB 5 codified and expanded the California Supreme Court’s holding in Dynamex v. Superior Court, wherein the Court adopted the ABC test. Under the ABC test, a worker is considered an employee, and not an independent contractor, unless the employer can demonstrate all three of the following requirements:
A – The individual is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
B – The individual performs work that is outside the usual course of the hiring entity’s business.
C – The individual is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Thus, under the ABC test, it would appear that the overwhelming majority of workers will be classified as employees in California rather than independent contractors.
The state has launched a website with information to assist California employers with understanding the ABC test, worker classifications, and employer obligations.