What is AB5 (and similar state laws)?
AB5, also commonly referred to as the California “gig worker law,” went into effect January 1, 2020. Additionally, similar legislation is being passed in other states. It’s designed to separate independent contractors from employees, eliminating gray area around worker classification. As a result of the law, it’s likely that many independent contractors will be reclassified as employees and benefit from certain protections, including minimum wages and various benefits.
For a more detailed explanation, check out our article, “Breaking Down California Assembly Bill 5 and its Effect on Your Business in 2020.”
Or, watch our webinar presentation, “AB5: What Does it Mean for Your Business?”
How should you respond to these laws?
The short answer is this: comply. By remaining in compliance, your business avoids any potential state-levied fees—which can be up to $25,000 for every violation in California—and you can rest easy, focusing on daily operations. For now, AB5 and other similar state laws are in a state of flux as some companies choose the wait-and-see approach and/or look to repeal legislation, but that’s a far riskier approach. Ultimately, we always recommend adhering to labor laws and avoiding worker misclassification. One way to accomplish this is to partner with a staffing company who acts as the employer of record for your workforce.