New Assembly Bill (AB 5) Affects Employee Classification January 10, 2020 California Legislation, Legislation AB 5, AB5, Employee Classification, Employment Status, Healthcare Legislation, Healthcare Workers, Legislation, Worker Classification 0 In September of 2019, Governor Newsom signed Assembly Bill (AB) 5 into law. The new law addresses the “employment status” of workers when they are claimed to be an independent contractor and not an employee. Q. What is AB 5 and what does it do? A. AB 5 is a bill the Governor signed into law in September 2019 addressing employment status when a hiring entity claims that the person it hired is an independent contractor. AB 5 requires the application of the “ABC test” to determine if workers in California are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission (IWC) wage orders. The California Supreme Court first adopted the ABC test in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903. Among other things, AB 5 added a new section to the Labor Code addressing these issues (section 2750.3). Q. What is the ABC test? A. Under the ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions: The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; The worker performs work that is outside the usual course of the hiring entity’s business; and The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. Read the Full Bill Summary CMA Webinar on AB 5 CMA will be hosting a webinar on January 30, 2020, The ABCs of AB 5: Classifying Health Care Workers in California's Gig Economy, that will discuss the new law and give a basic understanding of how California classifies various healthcare workers and what business and workers can do to protect their rights, risks of misclassification and what's next for AB 5. Register for the AB 5 Webinar Comments are closed.