Newsom Signs Legislation to Extend Industry Exemption to AB 5 for Construction Trucking

The Governor has signed AB 1561 to extend the sunset on the exemption granted to construction trucking subcontractors from the provisions of AB 5. AB 5 codified the “ABC test,” the test now broadly used to determine whether a worker is considered an independent contractor or an employee.  This test was established by the California Supreme Court’s ruling in Dynamex Operations West, Inc. v. Superior Court, (2018) 4 Cal.5th 903.

The exemption language was placed into AB 5 to remove the holding in the Dynamex court decision from determining employee or independent contractor status between contractors and independent owner operators providing construction specific trucking services.  In its place, AB 5 created a new standard that allowed for the previous and long-standing test adopted by the California Supreme Court in the case of S. G. Borello & Sons, Inc. to provide the determination of employee or independent contractor status, so long as the independent owner operator providing the construction trucking service can demonstrate true independent contractor status. The exemption was necessary to address significant operational impacts that AB 5 brought to the industry, which would have shutdown jobsites. The exemption will now sunset on January 1, 2025, providing the industry three additional years to develop compliance with AB 5.

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