California AB5 is a 2019 California law that codified the "ABC test" for deciding whether a worker is an employee or an independent contractor, presuming employment unless the hiring entity proves all three conditions.
Enacted as Chapter 296, Statutes of 2019 and effective January 1, 2020, AB5 wrote into the Labor Code the test the California Supreme Court adopted in Dynamex Operations West v. Superior Court (2018). A person providing labor or services for pay is an employee unless the hiring entity shows that the person (A) is free from its control and direction in performing the work, under contract and in fact; (B) performs work outside the usual course of its business; and (C) is customarily engaged in an independently established trade, occupation, or business of the same nature. AB5 applied the test across most of the Labor Code and parts of the Unemployment Insurance Code, with exemptions for listed occupations.
The law has changed since. AB 2257 (2020) repealed the original Labor Code §2750.3 and moved the test and its exemptions to a new article beginning at §2775. In November 2020, voters approved Proposition 22, which treats app-based rideshare and delivery drivers as independent contractors outside the test; the California Supreme Court upheld it in Castellanos v. State of California on July 25, 2024. As of 2026, the ABC test remains the default for most California workers, and classification matters for any organization whose contributors are not conventional employees, including a 📝Worker Cooperative. This is a general explanation, not legal advice.