When does AB 5 ABC Test become effective?
California AB-5 ABC test became effective January 1, 2020. However, different timeframes apply depending on the circumstances, see below.
Free legal advice. Call now: 800-484-4610
Nakase|Wade law firm represents companies, businesses, and employers – exclusively.
We invite your attention to our disclaimer.
For purposes of IWC wage orders and violations of the Labor Code relating to wage orders
The ABC test was already in effect for these purposes (as explained in a Labor Commissioner’s Office Opinion Letter) prior to 2020 due to the Dynamex Supreme Court decision. AB 5 is intended to codify — meaning write into the Labor Code — the ABC test from Dynamex, which has been the law in California since the opinion was issued in 2018.
Recognizing that the ABC test already applies to certain claims (wage order claims and Labor Code claims relating to wage orders) that pre-date January 1, 2020, section 2785 also provides that the exemptions from the test for certain occupations (see Question 7) apply to these claims. The hiring entity would not be required to use the ABC test with respect to these claims if it establishes that the job or occupation falls within one of the exemptions – including if the claim involves work performed before January 1, 2020.
For purposes of all other Labor Code provisions not relating to IWC wage orders
The ABC test must be used for these purposes beginning January 1, 2020 (unless an exemption from the test applies for certain occupations – see Question 7).
For purposes of the Unemployment Insurance Code, including determining eligibility for Unemployment Insurance, Disability Insurance, and Paid Family Leave benefits
The ABC test must be used for purposes of the Unemployment Insurance Code beginning January 1, 2020. This change will affect how the Employment Development Department (“EDD”) determines eligibility for Unemployment Insurance, Disability Insurance, or Paid Family Leave benefits, which considers how much a worker earns as an employee during “base periods.” In making this determination, the EDD will use the ABC test to determine whether the worker is an employee or an independent contractor for work performed on or after January 1, 2020. (unless an exemption from the test applies for certain occupations — see Question 7).
For more information on how the EDD uses base periods to determine eligibility for these benefits, please see How Unemployment Benefits Are Computed (DE 8714AB) or Calculating Disability Insurance Benefit Amounts (for Disability Insurance and Paid Family Leave benefits).
For purposes of Workers’ Compensation Insurance
The ABC test must be used for this purpose beginning July 1, 2020. This means that for a worker who experiences a compensable injury on or after this date, the ABC test will apply to determine whether the worker is an employee or independent contractor (unless an exemption from the test applies for certain occupations).