Advocating for Construction

Understanding AB5 Impact

In coordination with the AGC Legal Advisory Committee, Donald “Dino” Velez of Smith, Currie and Hancock, LLP, developed the following fact sheets and guiding documents to help  you navigate the intricacies and impacts of the AB5 law:

• California Assembly Bill 5 Fact Sheet
• AB5 Analysis on Construction-Related Trucking Exemption
• AB5 Compliance Checklist
• Purchase Order Clause to Address Construction Trucking Services in AB5

The 411 on AB5

AB5 legislation can mean 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.

Under the ABC Standard, all workers are presumed to be an employee. To classify a worker as an independent contractor, the hiring party must show:

• The worker is free, both contractually and in practice, from control and direction on how to perform a service;
• The worker’s service is outside the hiring party’s usual services;
• The worker has an independently-established trade, occupation, or business of the same nature as the work performed.

AGC and our partners were successful in securing amendments to AB5 to address many construction industry related issues, including:

• Licensed contractor to CSLB-licensed subcontractor issues
• Business-to-business issues for construction service providers (non-trucking and non-licensed contractors)
• Trucking (owner operators/DBE/brokers) issues