Assembly Bill 5 ("AB 5"), which would expand Dynamex v. Superior Court's so-called "ABC Test" to all employment laws in California, suffered a surprising seatback on Monday in the state Senate's Appropriations Committee. If passed, the bill will severely restrict the use of independent contractors in California. But in a unanimous vote, the Appropriations Committee placed AB 5 into its “Suspense File” — blocking it from a full vote on the Senate Floor, its last stop before the Governor’s desk.

What happened?

While the Appropriations Committee did not give an official reason for its decision, the Committee cited to three state agencies' estimates that implementation of AB 5 would increase each of their budgets by at least $2 million. The Committee also credited two state agency statements that their overall budgets would increase because AB 5 would require them to reclassify some of their current workers as employees rather than independent contractors. Most notably, Senator Jones (R Santee) said that Dynamex was one of the “worst” decisions by the California Supreme Court and that supporters of the bill will have to be “patient” with the legislature while it works on this law. Whether this move will permanently derail AB 5 remains to be seen. The Appropriations Committee is set to vote on the bill again on August 30th at which time it will take one of three actions: (1) send it to the Senate floor (with or without further amendments) for a full vote; (2) classify it as a "Two Year Bill" meaning no further action will be taken on AB 5 this year, but it would be eligible for reconsideration next year; or (3) hold it "In Committee" which essentially kills the bill.

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