It entitles them to be classified as employees with the usual labor protections, such as minimum wage laws, sick leave, and unemployment and workers' compensation benefits, which do not apply to independent contractors.

That test states that a worker must be classified as an employee, and not a contractor, unless the employment meets all of the following conditions: (A) the individual operates free from the company’s direction and control, both in the contract and in reality; (B) the service is performed outside the usual course of business of the employer; and (C) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

[21] Proponents of the bill said it would give workers previously classified as contractors minimum wage, overtime, sick leave, unemployment and other benefits, and prevent the state from losing $8 billion from unpaid payroll taxes.

In August 2019, as the bill neared passage, gig economy companies Uber and Lyft also proposed a negotiated $21 minimum wage but to keep employees as independent contractors as an exception.

[2][22][34] Others are exempt with conditions, such as hairstylists, cosmetologists, and manicurists if they set their own pay rates, are paid directly by customers, and schedule appointments themselves.

[citation needed] On December 17, 2019, the American Society of Journalists and Authors and the National Press Photographers Association filed suit in United States District Court for the Central District of California, Western Division claiming the law unconstitutionally singled out freelance journalists by limiting the amount of work they can produce for any single publisher, unlike any other job category listed as "professional services".

[38][39] Uber and Postmates filed a similar suit at the end of December 2019, challenging that the law denies equal protection due to variance in the types of jobs exempted.

[44] In April 2020, the San Francisco Chronicle wrote, "Tens of thousands of musicians had said AB5, which took effect Jan. 1, would ruin their livelihoods by forcing them to become employees or employers every time they played a one-night show at a coffee house, or used a backup vocalist, for instance.

"[47] In December 2019, Vox Media ended contracts with about 200 freelance sports writers and editors who wrote for the blog network SB Nation, and announced it would replace them with 20 new part-time and full-time employees.

[47] Freelance journalists who live in California fear that it will be harder to get work, because companies will not want to deal with the additional paperwork and legal liabilities of AB 5 and will instead hire someone from another state.

[48]: 1 In December 2019, CNN reported that AB 5 "prevents freelancers writers, editors and photographers from contributing more than 35 'content submissions' to a media organization per year.

[52] In May 2020, California Attorney General Xavier Becerra sued Uber and Lyft, alleging the ride-hailing companies had misclassified their drivers as "independent contractors" rather than "employees" in violation of AB5.

The suit alleged that Uber and Lyft denied their workers mandated "employee" benefits and protections such as minimum wage and overtime pay, reimbursement for business-related expenses, unemployment and disability insurance, and paid sick leave.

[54][55] Los Angeles City Attorney Mike Feuer sued several trucking companies, alleging that they were violating AB5 by classifying their drivers as "independent contractors" rather than "employees", but Superior Court judge William Highberger decided that AB5 is pre-empted by the Federal Aviation Administration Authorization Act of 1994.