What Is California Assembly Bill 5?

April 2021

California Assembly Bill 5 is a law that was passed in January of 2020 and that is also sometimes referred to as “the gig worker bill” because it drastically changes the criteria by which an employer can classify an employee as an independent contractor. This new law is designed to protect independent contract workers who have few rights and protections as workers and who may not form unions. It is supposed to greatly increase the number of full employees by changing the status of these contract workers to workers who will be protected by the law and who will be eligible for benefits like overtime pay, rest breaks, workers’ compensation insurance and disability benefits. Since there are many independent contract workers in California, this bill is likely to affect a large number of people.

The ABC Test

Assembly Bill 5 was passed as a result of a Supreme Court ruling stating that employers must use a three-pronged test, called the ABC test, to determine the classification of an employee as either an independent contractor or a regular employee. The ABC test assumes that all workers are to be classified as employees unless three things can be proven. These three things are that the worker is free to work without the control or direction of the company, that the worker is doing work that is outside of the company’s usual work activities, and that the worker is engaged in an independently established occupation. If those three things are true, then the worker may be classified as an independent contractor.

How AB5 May Hurt Employers

Although Assembly Bill 5 is beneficial to many employees, it may also hurt some employers. Companies who previously did not pay the minimum wage or who did not provide any health insurance, paid sick time and vacation time, paid rest breaks or similar benefits will now have to do so, and this will add to their operating costs. These increased costs to the employer may also be passed along to those who purchase or consume their goods or services. Some independent contract workers may also be hurt by AB5 because it makes them more dependent upon an employer and also more restricted by the rules of employment that are set up by the employer, like specific work hours.

 Call to Schedule a Consultation With a California Employment Defense Lawyer Today

If you are an employer who wants to learn more about Assembly Bill 5, call to schedule a consultation with a California employment defense lawyer today. The skilled professionals at the Straggas Law Group, APC can help you to prepare for the changes that this new law is likely to bring to your company. We serve the cities of Irvine, Newport Beach, Santa Ana, Costa Mesa and surrounding Orange County communities. Visit our website at straggaslaw.com or give us a call at 949-660-9100 and let us help you to better understand and work with Assembly Bill 5.

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