California: AB 5 Updates for Independent Contractors

On January 1, 2020, AB 5 went into effect. It essentially codified the ruling in Dynamex Operations West, Inc. v. Superior Court, which implemented an ABC test for determining whether a worker is an employee or an independent contractor. However, the bill also broadened the application of the ABC test and add a slew of exemptions for certain types of workers under certain circumstances.

Since the bill was signed, there has been a flurry of activity surrounding its application and exemptions. Most significantly, on January 16, 2020, a federal district court issued a preliminary injunction against enforcing AB 5 against independent truck drivers on the basis that the bill may be preempted by federal law. On January 8, 2020, in a separate lawsuit brought by the Los Angeles City Attorney against a group of logistics companies for misclassification, a California Superior Court judge stated that AB 5 did not apply to owner-operator truck drivers because they are subject to federal law. There is also a legal challenge pending by freelance writers and photographers on how AB 5 applies to them.

Additionally, the California Labor & Workforce Development Agency recently announced a resource website available to employers, employees, and government agencies with information on the ABC test, an FAQ, and information on labor laws.

Some may be asking – what does the future hold? Certainly, expect to see continued challenges to the bill, and perhaps even more expansion of the exceptions. Interestingly, the state Attorney General released a proposed ballot measure that, if it receives enough signatures, may allow Californians to vote in November on whether to exempt app-based transportation providers and delivery drivers from AB 5. Employers should continue to look for updates on this law as it is expected to be an ongoing shifting landscape.

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