California Companies Brace For Litigation After Labor Bill

California employers say a new measure that could make it harder for them to classify their workers as independent contractors would have ripple effects across the gig economy and beyond, prompting new litigation, investor concerns, and uncertainty about whether existing business models will be upended.

The measure, Assembly Bill 5 or A.B. 5, would codify a more rigid test for employers to classify workers as independent contractors instead of employees. Known as the “ABC test,” it would create a more difficult landscape for companies that rely on contractors. The distinction is key because employees are entitled to benefits such as ...