More than a million Californians have been misclassified by employers looking to cut costs at the expense of workers. Companies relying on this illegal business model decimate the state's worker safety-net programs, undermine fair competition, and subject law-abiding businesses to unfair competition.

Ultimately, when workers without protections are laid off or cannot find work, get sick or injured on the job, or they retire, taxpayers end up bearing the costs of supporting them. The state's Division of Labor estimates that the misclassification of workers results in an estimated annual payroll tax revenue loss of $7 billion per year. 

By applying a strict test to determine who is an independent contractor and making employment status a default under the law, working Californians who have been kept off payroll as employees will gain access to basic labor rights for the first time, including rights to minimum wage, overtime, unemployment insurance, workers' compensation, paid sick days, paid family leave, workplace protections against harassment and retaliation, and the right to form or join a union. Some of the many workers who will benefit include janitorial workers, construction workers, port truck drivers, home health aides, hotel and hospitality workers, delivery and ride-hail drivers. 

The unanimous, bipartisan Dynamex decision handed down last spring by the California Supreme Court was one of the most important workers' rights advances in a generation with the potential to bring many workers into employee status, which offers more stability and security and the opportunity to organize. AB 5 codifies and clarifies this decision and will take effect on January 1, 2020.