AB5 GUIDE: California's new contractor bill is shaking up the gig economy. Here's everything businesses and freelancers need to know about navigating the law.

• California Assembly Bill 5 (AB5) requires company workers to be considered as employees.
• AB5, which went into effect on January 1, 2020, impacts how companies like Uber and Doordash manage workers who are currently recognized as contractors.
• The hirer must use an ABC test to prove that workers are independent contractors.
• Business Insider regularly covers legal changes that affect how you work. You can read them all by subscribing to BI Prime.

California Assembly Bill 5 affects how companies recognize people who work for them. Better known as AB5, the bill tightens the definition of "independent contractor" and requires employers to conduct ABC tests to determine whether or not their workers should be classified as full-time employees.

The bill minimizes the amount of work which can be conducted by freelancers and contractors without being considered full-timers. The intention is to prevent employers from taking tax shortcuts and to provide workers who should be classified as employees with healthcare, workers' compensation, paid time off, and other rights.

This forces companies like Uber, Lyft, or other contractor-reliant businesses that operate in California to change their employment systems. But there are some exemptions: Below are some references to help you ensure that you and your business are in compliance with AB5. 

For business owners: California's Assembly Bill 5 makes it harder for companies to classify workers as 'independent contractors.' Here are 2 options small businesses have for maintaining their workforce.

For freelancers and contractors: Everything contractors and freelancers need to know about navigating California's new Assembly Bill 5, which is set to drastically change the gig economy in the state

For anyone not sure what an 'independent contractor' is: California's Assembly Bill 5 drastically affects gig economy companies like Uber and DoorDash. This is what an independent contractor actually is, and how it's classified under the new law.

SEE ALSO: Worked 'like a rented mule': A truck driver claims an Amazon contractor forced him to drive for up to 30 hours straight in a new lawsuit

DON'T MISS: SteadyPay raises $4 million to help gig economy workers stay afloat with salary top-ups

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