The Ninth Circuit rejected another constitutional challenge to AB5, which codified the ABC test for employee classification. This case reinforces that AB5 and the ABC test are here to stay. In circumstances where the ABC test applies, a worker is considered an employee unless a company can demonstrate that the worker:
(a) is free from its control;
(b) performs work outside its line of business; and
(c) is primarily engaged in an independently established trade, occupation, or business.
In a unanimous, unpublished opinion, the appellate court shot down the arguments of Owner-Operator Independent Drivers Association, or OOIDA, which challenged Assembly Bill No. 5, the landmark law that makes it more difficult for companies to classify workers as independent contractors. The group sued the Golden State, arguing that AB 5 is unconstitutional because it burdens interstate commerce and discriminates against out-of-state drivers. AB 5, which took effect in 2020, codified the three-prong ABC test for determining independent contractor status from the California Supreme Court's 2018 ruling in Dynamex Operations West v. Superior Court . Under the ABC test, a worker is considered an employee unless a company can demonstrate that the worker is free from its control, performs work outside its line of business and operates as an independent firm.
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