California Gov. Gavin Newsom’s proposed state budget calls for $20 million to enforce the AB 5 law that gets tough in independent contractor compliance, the San Francisco Examiner reported. AB 5 codifies the more strict ABC test for determining independent contractor status. The law has raised concerns among human cloud firms, and one firm recently decided [1] to focus on other states than California in the wake of the law.
Meanwhile, a Los Angeles County Superior Court judge has ruled AB 5 does not apply to independent truck drivers in the state because the measure is preempted by federal law.
AB 5 and the California Supreme Court Dynamex decision, which gave rise to the legislation, “run afoul of Congress’s 1994 determination in the Federal 12 Aviation Administration Authorization Act … that a uniform rule endorsing use of non-employee independent contractors (commonly known in the trucking industry as “owner-operators”) should apply in all 50 states to increase competition and reduce the cost of trucking services,” according to court documents.