Last month, Governor Gavin Newsom signed AB 5 – a sweeping piece of legislation that will reclassify hundreds of thousands of workers as employees instead of independent contractors.

"The hollowing out of our middle-class has been 40 years in the making, and the need to create lasting economic security for our workforce demands action," Newsom said in a statement. "Assembly Bill 5 is an important step."

The bill codifies a ruling from the California Supreme Court that included a new test for determining whether a worker is an employee or an independent contractor. The landmark decision of Dynamex Operations West, Inc. v. Superior Court of Los Angeles, No. S222732 (Cal. Sup. Ct. Apr. 30, 2018) was a unanimous verdict from the court. 

Already, companies that use gig workers — including ridesharing companies like Uber — are vowing to fight the legislation in court.

The bill could also have impacts in healthcare, but the California Medical Association (CMA) fought hard to ensure the interests of physicians were protected under the bill. CMA successfully secured an exemption for physicians from the legislation, arguing that the decision and the bill should be primarily focused on protecting lower-wage workers and that physicians should not be impacted by the codification of the Dynamex Case.

During the debate over the bill, a question was raised as to whether AB 5 would impact California’s bar on the corporate practice of medicine. It does not. The exemption made explicit in AB 5 as it pertains to physicians is comprehensive, ensuring that physicians are not unduly influenced by a corporate entity when practicing medicine. 

Dentists, podiatrists, psychologists and veterinarians were among those also securing exemptions. However, other healthcare workers, including physician assistants, nurses and behavioral health providers, will be impacted by the bill. CMA will continue to monitor the implementation of AB 5 and its impact on physicians, patients and the healthcare industry.

You can find out more about the Dynamex decision and AB 5 here.

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