What is California's AB 5 and How Does it Affect Independent Contractors and Employees?
California's AB 5 has redefined the criteria for classifying workers as independent contractors or employees. Learn how to determine whether a worker is an employee or an independent contractor, and what protections are available to employees under AB 5.
Save 90% on your legal bills
What is California's AB 5?
California's Assembly Bill 5 (AB 5) is a law that aims to protect workers' rights and ensure that they are treated fairly. The bill went into effect on January 1, 2020, and it has significantly changed the way independent contractors and employees are classified in the state.
What is the Difference Between Independent Contractors and Employees?
Before AB 5, businesses could classify workers as independent contractors, which meant they were not entitled to the same benefits and protections as employees. This led to a lack of job security, fair wages, and benefits for many workers. AB 5 aims to address this issue by redefining the criteria for classifying workers as independent contractors or employees.
How Does AB 5 Define Independent Contractors and Employees?
Under AB 5, a worker is considered an employee if they are engaged in a business or trade, and the business or trade is the primary purpose of the worker's activities. This means that if a worker is performing services for a business, and the business is the primary purpose of their activities, they are likely to be considered an employee.
What are the Factors Used to Determine Whether a Worker is an Employee or an Independent Contractor?
AB 5 provides a list of factors that can be used to determine whether a worker is an employee or an independent contractor. These factors include:
- The level of control the business has over the worker's activities
- The worker's level of independence
- The worker's level of skill and expertise
- The worker's level of risk and reward
- The worker's level of integration with the business
What Protections are Available to Employees Under AB 5?
AB 5 provides protections for workers who are classified as employees. These protections include:
- Minimum wage and overtime protections
- Unemployment insurance benefits
- Workers' compensation benefits
- Disability insurance benefits
- Health insurance benefits
What are the Penalties for Misclassifying Workers as Independent Contractors?
AB 5 also provides penalties for businesses that misclassify workers as independent contractors. These penalties can include fines and penalties, as well as potential criminal charges.
What is the Read Time for this FAQ?
The read time for this FAQ is 10 minutes.
