September 25, 2019 – California Governor Gavin Newsom has signed into law a new measure—Assembly Bill 5—which redefines how businesses classify their workers.
Commonly known as AB 5, the new law seeks to codify the “ABC Test” for determining the professional nature of an employer/employee relationship. Simply put, the bill makes it much more difficult for businesses to utilize workers as independent contractors.
The law will take effect on January 1, 2020, and require many businesses, especially those in the so-called ‘gig economy,’ to either restructure their operations or transform workers into employees.
The law contains no exceptions for franchisor/franchisee relationships and could potentially require reassessment of many such arrangements.
AB 5 was approved earlier this year by the California State Senate 29-11 on a party-line vote and by the Assembly by 56-15.
For a complete breakdown of the new law and its implications, go to https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB5