AB5 (California Assembly Bill 5)
California Assembly Bill 5 (AB5) is a 2019 state law, effective January 1, 2020, that codified the ABC test for worker classification in California. Under AB5, a worker is presumed to be an employee unless the hiring business proves all three ABC-test prongs — freedom from control, work outside the usual course of business, and an independently established trade. AB5 applies to most worker classification analyses in California, with numerous profession-specific exemptions.
Key facts
- Effective January 1, 2020
- Codified the ABC test previously established in the California Supreme Court's Dynamex decision (2018)
- Includes dozens of profession-specific exemptions — physicians, lawyers, architects, real estate agents, insurance brokers, and others — when specific criteria are met
- Amended multiple times (AB2257 in 2020 expanded exemptions; subsequent bills have added more)
- Applies to most wage-and-hour and unemployment-insurance classifications in California
Why AB5 matters for employers
Before AB5, California classification defaulted to the Borello test, a multi-factor analysis with no single decisive prong. AB5 reversed the presumption — workers are presumed employees unless the employer proves all three ABC prongs. The C-prong (independently established trade) is the most common failure. For a new California contractor engagement, AB5 significantly raises the compliance bar.