California Assembly Bill 5 (2019)

This article needs to be updated. The reason given is: The information is accurate but obsolete. In 2020, AB 5 was extensively revised and reintroduced as AB 2257. That bill was written into California law, i.e., codified, late in the year. Please help update this article to reflect recent events or newly available information. (February 2021)

California Assembly Bill 5 (2019)
California State Legislature
Full name	An act to amend Section 3351 of, and to add Section 2750.3 to, the Labor Code, and to amend Sections 606.5 and 621 of the Unemployment Insurance Code, relating to employment, and making an appropriation therefor
Introduced	2018-12-03
Assembly voted	2019-09-11 (56–15)
Senate voted	2019-09-10 (29–11)
Signed into law	2019-09-18
Governor	Governor Gavin Newsom
Code	Labor Code and Unemployment Insurance Code
Section	3351, 2750.3, 606.5, 621
Resolution	AB 5
Website	Full text of the bill
Status: Current legislation

California Assembly Bill 5 or AB 5 is a state statute that expands a landmark Supreme Court of California case from 2018, Dynamex Operations West, Inc. v. Superior Court ("Dynamex").^[1] In that case, the court held that most wage-earning workers are employees and ought to be classified as such, and that the burden of proof for classifying individuals as independent contractors belongs to the hiring entity. AB 5 extends that decision to all workers. It entitles them to be classified as employees with the usual labor protections, such as minimum wage laws, sick leave, and unemployment and workers' compensation benefits, which do not apply to independent contractors.^[2] Concerns over employee misclassification, especially in the gig economy, drove support for the bill, but it remains divisive.^[3]

The law codifies and expands the scope of the so-called "ABC test", established in the Dynamex ruling. That test states that a worker must be classified as an employee, and not a contractor, unless the employment meets all of the following conditions: (A) the individual is free from direction and control applicable both under the contract for the performance of service and in fact; (B) the service is performed outside the usual course of business of the employer; and (C) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.^{[2]: 1 [4][5]}

In response to the passage of AB 5, many industries began to lobby for exemptions. Approximately 100 professions were specifically exempted from AB5; generally being professions seen to directly work with and set their own prices to customers.

The ridesharing companies Uber and Lyft both lobbied heavily against passage of the bill, and after it was passed they lobbied unsuccessfully to get the California legislature to exempt ridesharing from the bill. They (along with food delivery company DoorDash) also refused, after the bill's passage, to reclassify their drivers as employees.^[6][7] The three companies, now also joined by Instacart and Postmates, funded a ballot initiative, Proposition 22, to exempt both ridesharing and delivery companies from the AB 5 requirements, while also giving drivers some new protections, including minimum wage and per-mile expense reimbursement. Proposition 22 passed in November 2020 with 59% of the vote.^[8][9]