Calif. (September 20, 2019) - On September 10,
2019, the California Legislature passed Assembly Bill 5 (AB 5) in a 29-to-11 vote. Thereafter, on
September 18, 2019, the bill was signed by Governor Newsom. The
bill dramatically alters the legal standard for evaluating whether
a worker is an employee or an independent contractor. Beginning
January 1, 2020, many individuals classified as independent
contractors may be considered employees. However, the bill contains
exceptions for specific businesses in which workers will remain
independent contractors.
The Purpose of Assembly Bill
Per the Legislative Counsel’s Digest, AB 5 was intended to
“codify the decision in the Dynamex case
and clarify its application.” Further AB 5 is also intended
to prevent the loss of state revenue that “use[s]
misclassification to avoid obligations such as payment of payroll
taxes, payment of premiums for workers’ compensation, Social
Security, unemployment, and disability insurance.”
