Landmark Bill Passes: California Codifies "ABC" Test For Worker Classification

On Thursday, September 12^th, the California State Assembly passed Assembly Bill 5 ("AB 5"), the controversial new law that codifies the three-factor "ABC" test introduced by the California Supreme Court in its 2018 Dynamex decision. The passage of AB 5 marks a sea change in the way that companies doing business in California will be required to classify their workers. AB 5 now goes to Governor Gavin Newsom's desk for his signature, and Governor Newsom has previously committed to sign the bill into effect.

Effective January 1, 2020, AB 5 adopts Dynamex's rigorous three-factor test for determining how a company may classify its workers. Under the so-called "ABC" test, which will be codified in Section 2750.3 of the California Labor Code, a worker will be considered an employee unless the company hiring the worker establishes all of the following three prongs: