--- title: AB 5 & California's Latest Impact on IC Compliance description: "AB5 is a codification of California's previous 2018 Dynamex decision, which outlined a strict three-point test for worker classification that states all workers are \"employees\" unless the employer proves the worker is an Independent Contractor with each of the three factors. " image: https://blog.populusgroup.com/hubfs/California%20AB5.jpg --- [![PopulusGroup_Plane_Logo_rgb-01](https://blog.populusgroup.com/hs-fs/hubfs/PG%20Registered%20Logos/PopulusGroup_Plane_Logo_rgb-01.png?width=1966&height=1530&name=PopulusGroup_Plane_Logo_rgb-01.png "PopulusGroup_Plane_Logo_rgb-01")](https://www.populusgroup.com/en) - [Employers](https://www.populusgroup.com/en/workforce-solutions) - [Careers](https://www.populusgroup.com/en/job-seeker) - [Contractors](https://www.populusgroup.com/en/contractor-resources) - [Blog](https://blog.populusgroup.com) - [About](https://www.populusgroup.com/en/about) - [Impact](https://www.populusgroup.com/en/impact) - 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[Megan Anderson (1)](https://blog.populusgroup.com/author/megan-anderson) - [Michelle Fedorkiw (1)](https://blog.populusgroup.com/author/michelle-fedorkiw) - [Kimberly Mills (1)](https://blog.populusgroup.com/author/kimberly-mills) - [Denis Kenny (1)](https://blog.populusgroup.com/author/denis-kenny) - [Tim Wang (1)](https://blog.populusgroup.com/author/tim-wang) # AB 5 & California's Latest Impact on IC Compliance [![Rosemarie Fontela](https://blog.populusgroup.com/hubfs/Rosemarie%20Fontela.jpeg)](https://blog.populusgroup.com/author/rosemarie-fontela) [by Rosemarie Fontela](https://blog.populusgroup.com/author/rosemarie-fontela) ![California AB5](https://blog.populusgroup.com/hs-fs/hubfs/California%20AB5.jpg?width=800&name=California%20AB5.jpg) **If the Gig Economy was a high school, Independent Contractor Compliance would be on the front page of the school newspaper all the time.** There’s a lot to keep up with, much of it revolving around the state of California. Here’s a rundown of the current hot topic; AB 5. Catch-up now so you can go about your regularly scheduled school, ahem, work day. # AB 5 Summary In September 2019, Assembly Bill 5, now widely known as AB 5 was officially signed into California Law by Governor Gavin Newsom, set to take effect January 1, 2020. AB 5 is a codification of California's previous [2018 Dynamex decision](https://blog.populusgroup.com/california-adopts-abc-test-for-independent-contractors), which outlined a strict three-point test for worker classification that states all workers are "employees" unless the employer proves the worker is an Independent Contractor with each of the three factors.  Those three factors are: 1. The worker is **free from control/direction** of the hiring party 2. The worker **performs work that is outside the usual course of the hiring party’s business** (this typically is the most challenging for businesses to prove). 3. The worker is engaged in an **independently established trade**, occupation or business which performs work similar to the work performed for the recipient of services. # The Key Take-Aways AB 5 not only codifies the Dynamex ABC test, but also provides the opportunity for **expanding employment law protections, such as workers compensation, unemployment law**, etc.  It covers both wage order and non-wage order claims under California law. **AB 5 does include exemptions for several types of workers** (such as Doctors, real estate agents and hairdressers), who will not be subject to the three factor test, but rather using a less strict test, like those still used by most states and under a variety of federal laws. # The Potential Impact Some organizations may now be more inclined choose a safer classification for their independent contractors by classifying them as temporary employees. Other companies many elect to work with an Agent of Record, like Populus Group, to vet their Independent Contractors, and provide all the necessary documentation to ensure that in the event of an audit, they’re covered by providing *multiple factors* that later can be used to defend employers from misclassification. These include, but are not limited to the ABC Factors. Looking forward, we can expect that the AB 5 will continue to be challenged by lobbyists of industries who feel that they should be exempt too.  Some may even attempt to reverse the legislation in a 2020 ballot initiative. # Do You Work with ICs? [![IC Best Practices Guide](https://no-cache.hubspot.com/cta/default/450029/add55e79-c568-4c9d-901f-4129d58a7813.png)](https://cta-redirect.hubspot.com/cta/redirect/450029/add55e79-c568-4c9d-901f-4129d58a7813) [![IC vs. W2 Quick Guide](https://no-cache.hubspot.com/cta/default/450029/77a259e1-20bf-4064-8bd9-8691d00c0c7e.png)](https://cta-redirect.hubspot.com/cta/redirect/450029/77a259e1-20bf-4064-8bd9-8691d00c0c7e) Stay tuned Gig Economists, we’ll be sharing more updates as things unfold! Make sure to subscribe to the PG Blog! [![Get updates like this straight to your inbox ](https://no-cache.hubspot.com/cta/default/450029/9df9f3a5-17e1-4c4d-8b6d-dbeaca02c809.png)](https://cta-redirect.hubspot.com/cta/redirect/450029/9df9f3a5-17e1-4c4d-8b6d-dbeaca02c809) ## Leave a comment [![Rosemarie Fontela](https://blog.populusgroup.com/hubfs/Rosemarie%20Fontela.jpeg)](https://blog.populusgroup.com/author/rosemarie-fontela) Written by [Rosemarie Fontela](https://blog.populusgroup.com/author/rosemarie-fontela) Rosemarie is our Director of IC Compliance and is responsible for leading the team that helps our customers screen and maintain compliance with their IC/1099 population. She’s also a passionate co-leader of our Cultures Connected Employee Resource Group (ERG). She’s a proud Filipina, wife, and mom to three amazing girls and spends her free time enjoying the food scene in the San Francisco Bay area. ### Related posts ###### [Independent Contractor Compliance (ICC)](https://blog.populusgroup.com/topic/independent-contractor-compliance-icc) [Summer 2024 Compliance Roundup](https://blog.populusgroup.com/summer-2024-compliance-updates) [![Jen Pasquier](https://blog.populusgroup.com/hubfs/jen%20pasquier-1.png) Jen Pasquier](https://blog.populusgroup.com/author/jen-pasquier) ###### [Independent Contractor Compliance (ICC)](https://blog.populusgroup.com/topic/independent-contractor-compliance-icc) [3 Workforce Trends Transforming Contingent Labor in 2024](https://blog.populusgroup.com/3-workforce-trends-transforming-contingent-labor-in-2024) [![Austin McCool](https://blog.populusgroup.com/hubfs/Austin%20McCool-1.png) Austin McCool](https://blog.populusgroup.com/author/austin-mccool) ###### [Independent Contractor Compliance (ICC)](https://blog.populusgroup.com/topic/independent-contractor-compliance-icc) [Is Your Contractor Really an Employee? What the 2024 DOL Rule Says](https://blog.populusgroup.com/is-your-contractor-really-an-employee-what-the-2024-dol-rule-says) [![Jaylynn Hogeboom](https://blog.populusgroup.com/hubfs/Jaylynn%20Buckley.png) Jaylynn Hogeboom](https://blog.populusgroup.com/author/jaylynn-hogeboom) **Corporate Headquarters** Populus Group, Troy Headquarters 3001 West Big Beaver Road Suite 608 Troy, MI 48084 [248-712-7900](tel:248-712-7900) [opportunities@populusgroup.com](mailto:opportunities@populusgroup.com) **Employment Verification Requests\*** [248-928-0530](tel:248-928-0530) [voe@populusgroup.com](mailto:voe@populusgroup.com) [Employer Services](http://www.populusgroup.com/en/workforce-solutions)[Begin Your Job Search](http://www.populusgroup.com/en/job-seeker) ©2023 Populus Group [Privacy Policy](http://www.populusgroup.com/en/privacy-policy)[Terms & Conditions](http://www.populusgroup.com/en/terms-conditions)[Site Map](http://www.populusgroup.com/en/sitemap) [![](https://blog.populusgroup.com/hubfs/Images/blog/icon-social-fb%20png.png?h=28&la=en&w=28)](https://www.facebook.com/populusgroup) [![](https://blog.populusgroup.com/hubfs/Images/blog/icon-social-twitter%20png.png?h=28&la=en&w=28)](https://twitter.com/populusgroup) [![](https://blog.populusgroup.com/hubfs/Images/blog/icon-social-instagram%20png.png?h=28&la=en&w=28)](https://www.instagram.com/populusgroup/) [![](https://blog.populusgroup.com/hubfs/Images/blog/icon-social-li%20png.png?h=28&la=en&w=28)](https://www.linkedin.com/company/70117/) [![](https://blog.populusgroup.com/hubfs/Images/blog/icon-social-glassdoor%20png.png?h=28&la=en&w=28)](https://www.glassdoor.com/Overview/Working-at-Populus-Group-EI_IE259242.11,24.htm) [![](https://blog.populusgroup.com/hubfs/Images/blog/icon-social-youtube%20png.png?h=28&la=en&w=39)](https://www.youtube.com/channel/UC-O9v1hz-Q4OW0Ze0b9O_sg) [![](https://blog.populusgroup.com/hubfs/Images/blog/icon-social-gplus%20png.png?h=28&la=en&w=28)](https://plus.google.com/u/0/102588349136181669410) ![](https://blog.populusgroup.com/hubfs/Images/blog/icon-top%20png.png?h=33&la=en&w=33)