AB 2257's impact on public-sector employers

Assembly Bill (AB) 5 adopted the three-pronged ABC test from Dynamex Operations West Inc. v. Superior Court for determining whether a worker is an employee or an independent contractor for purposes of the Labor Code, the Unemployment Insurance Code, and the Wage Orders enforced by the Industrial Welfare Commission. AB 5 set forth several exemptions from the ABC test, including one for business-to-business relationships, in which the common-law control test for classification established in S.G. Borello & Sons, Inc. v. Department of Industrial Relations governs.

At the time AB 5 became law in January 2020, there was significant confusion about whether it applies to public agencies because it doesn't expressly state that it does but instead merely makes the new ABC test for employee classification applicable to all provisions of the Labor Code and the Unemployment Insurance Code. We concluded there was a strong argument that AB 5 doesn't apply to public-sector employers under most, if not all, provisions of the Labor Code but that it likely does apply to public-sector employers' obligations under the Unemployment Insurance Code. (See "Does AB 5 apply to public-sector employers? Lawmakers aren't finished" on pg. 4 of the February 24, 2020, issue of .)