AB5, Dynamex, the ABC Standard, and their Effects on the Construction Industry

Legislative building

AB5 will increase the cost of construction in California.

December 9, 2019
Donald A. Velez - Smith Currie

Last year, we reported that the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 (“Dynamex”) adopted a new, pro-employment standard (the “ABC Standard”), which presumes a worker is an employee versus an independent contractor under California wage orders and regulations.

Assembly Bill 5 (“AB5”) has now been passed by the California Legislature and signed by Governor Newsom. Bill AB5 codifies the ABC Standard and brings increased costs, administrative duties, and legal risks for hiring parties on multiple fronts, including, but not limited to:

  • Payroll taxes;
  • Meals, breaks and overtime policies and enforcement and premium pay;
  • Benefits;
  • Leave and PTO policies, requirements and enforcement;
  • Wage order violations;
  • Labor Code violations and Private Attorney General Actions (“PAGA”) claims;
  • Unemployment insurance; and
  • Workers’ compensation coverage, claims, and premiums.

Mr. Velez may be contacted at davelez@smithcurrie.com



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