Assembly Bill 5 – Limits Access To Healthcare

On June 1, 2020, I heard Governor Gavin Newsom say, “I intimately appreciate the incredible sacrifice, the courageous entrepreneurialism, the is so much part of the State of California, in particular, where innovation and entrepreneurial spirit runs through our veins…”

Respectfully, Governor, I believe your statement does not align with California Assembly Bill 5 (Gonzalez) or AB 5  that you signed into law on January 1, 2020. This bill prevents Advanced Practice Registered Nurses (APRNs) to work independently as entrepreneurs while exempting other healthcare clinicians, i.e., physicians, dentists, podiatrists, psychologists, and veterinarians.

AB 5 has taken away my ability to work as an entrepreneur allowing me to create or enter a workspace that fully values my skill-set and knowledge as an evidence-based clinician.

Because of this legislation, I am now a W2 employee, having worked seven years independently through my nursing corporation as an Adult Nurse Practitioner where I could negotiate my work schedule, compensation, practice setting policy and procedures and increase access to care. 

Working as an entrepreneur allowed me to utilize financial transparency that benefitted my clients, created innovative ways to improve the delivery of patient care, and mitigated unnecessary healthcare expenditures. This level of healthcare business understanding is another crucial component that strengthens the APRN profession and California. 

AB 5 prohibits APRNs from having full autonomy in healthcare settings that historically lack diversity among healthcare providers. Also, AB 5 limits nursing from executive board-level discussions and decision making. AB 5 may have started with good intentions addressing gig companies inadequate employee benefits, but what is good about preventing an avenue for non-employee APRN entrepreneurs increasing access to care. 

The Nurse Practitioner workforce is considered one of the fastest-growing primary care workforce. However, AB 5 (Asm. Lorena Gonzalez) decided to join the other barriers to practice opposers by restricting APRNs from creating affordable healthcare resources that have ultimately widen the healthcare gaps. 

Healthcare companies must use the “ABC test” to determine if other locum tenens (PAs, NPs, and CRNAs) and travel healthcare professionals (nurses, therapists, lab techs, and other professions) qualify as independent contractors. Under the ABC test, a worker is considered an employee and not an independent contractor unless the hiring entity satisfies all three items:      

  1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work.
  2. The worker performs work that is outside the usual course of the hiring entity’s business
  3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Q: What does this mean if you are not a physician and cannot pass the ABC test?

A: You must be a W-2 employee. If you intend to remain as a 1099 independent contractor, you may be unable to provide services in California.

Scenario #1: If you are a CRNA working as a W-2 with a local large healthcare system and has a part-time independent contractor arrangement in a rural setting, i.e., increasing access to care and allowing you to gain more financial stability for your family’s economic needs) – this avenue has been eliminated because of AB 5.

Impact A: Rural communities commonly have difficulty recruiting and retaining healthcare physician providers. Without CRNAs in the rural areas, patients are left without access to surgical procedures in small community hospitals.

Scenario #2: You are a Nurse Practitioner (NP) consulting independently with a physician managing patient in a long-term care / skilled nursing facility providing approximately 200 hours of patient encounter hours, per month, compared to 8 hours from the physician – is gone thanks to AB 5.

Impact B: The LTC/SNF facilities have historically been challenged with inadequate staffing and high percentages of unnecessary rehospitalizations. Several data points highlight that NPs improve the LTC/SNF staff communication, quality initiatives within these facilities, and patient safety.

Entrepreneurship is critical for the advancement of the health care field. However, AB 5 ensures that specific healthcare clinicians can remain as independent contractors while all others must be employees.

AB 5 is a state statute that has codified into law a landmark Supreme Court of California case, Dynamex Operations West, Inc. v. Superior Court. In this case, the court held that most workers are employees, ought to be classified as such, and the burden of proof for classifying individuals as independent contractors belongs to the hiring entity. 

Before the passage of Dynamex case, California courts relied on the “economic realities test” or “Borello Test” to determine whether someone was engaged as an independent contractor or as an employee. This test was announced in 1989 by the California Supreme Court in a case called S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

AB 5 entitles workers classified as employees to gain greater labor protections, such as minimum wage laws, sick leave, and unemployment and workers’ compensation benefits, which do not apply to independent contractors. 

AB5 is a law that inflicts substantial hardships on those who wish to earn a living as they see fit in spirited entrepreneurial California while limiting patient access to care.




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