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California Adopts ABC Test for Classifying Workers as Employees

California Assembly Bill (AB) 5 (Ch. 19-296) codifies the California Supreme Court’s ruling in the Dynamex Case.[1]

Under California Assembly Bill 5 (AB 5), most workers are presumed to be an employee for purposes of the California Labor Code, the Unemployment Insurance Code, and for most wage orders of the Industrial Welfare Commission, unless a hiring entity satisfies a three-factor test, referred to as the ABC test.[2] 

Under the ABC test, all three of these conditions must be met in order to treat the worker as an independent contractor:

  • A: The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact (the Borello “control test”[3]);
  • B: The worker performs work that is outside the usual course of the hiring entity’s business; and
  • C: The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

If the ABC test cannot be successfully applied, California employers are required to treat the worker as an employee of the organization and ensure that the worker(s) receive at least the minimum wage, workers’ compensation, unemployment insurance (if applicable), paid sick leave, overtime, and paid family leave.


[1] Dynamex
Operations West, Inc. v. Superior Court (2018))

[2] Labor Code

[3] S.G. Borello
& Sons, Inc. v. Dept. of Ind. Rel. (1989) 48 Cal.3rd 342

Posted in: Employment Law, News

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