AB 5 and the Dynamex Decision

In 2018, the California Supreme Court adopted a new, pro-employment standard (the “ABC Standard”) in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 (“Dynamex”) that presumes a worker is an employee versus an independent contractor under California wage orders and regulations. 
Assembly Bill 5 (“AB5”) was subsequently passed by the California Legislature and signed by Governor Newsom codifying the ABC Standard.

It is important that AGC of California members are aware of the impacts to their business. In coordination with the AGC Legal Advisory Committee, Donald “Dino” Velez of Smith, Currie and Hancock, LLP, developed the following fact sheets and guiding documents to help our members navigate the intricacies and impacts of the law:

California Assembly Bill 5 Fact Sheet

AB5 Analysis on Construction-Related Trucking Exemption
AB5 Compliance Checklist
Purchase Order Clause to Address Construction Trucking Services in AB5

The result brings increased costs, administrative duties, and legal risks for hiring parties on multiple fronts, including, but not limited to:  

  • Payroll taxes;
  • Meals, breaks and overtime policies and enforcement and premium pay;
  • Benefits;
  • Leave and PTO policies, requirements and enforcement;               
  • Wage order violations; 
  • Labor Code violations and Private Attorney General Actions (“PAGA”) claims;
  • Unemployment insurance; and
  • Workers’ compensation coverage, claims, and premiums.

    Under the ABC Standard, the worker is presumed to be an employee. To have the worker classified as an independent contractor, the hiring party must show: 
    • The worker is free, both contractually and in practice, from control and direction on how to perform a service; 
    • The worker’s service is outside the hiring party’s usual services; 
    • The worker has an independently-established trade, occupation, or business of the same nature as the work performed.  
    AGC and our partners were successful in securing amendments to AB5 to address many of the construction industry related issues in the bill including:  
    • Licensed contractor to CSLB Licensed subcontractor issues:  
    • Business to business for service providers in construction (non-trucking and non-licensed contractors) like testing etc  
    • Trucking – Owner Operators/DBE/Brokers

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