The commercial real estatemarket, in many ways, dodged AB 5, a new California State law thesubstantially restricts the use of subcontractors. In addition toreal estate brokers, the construction industry is exempt under thenew law. With already steep construction costs, the exemption was arelief to the industry.

"It is possible that AB 5 may have less of an impact on theconstruction industry than other industries such as the gig economybecause the law specifically exempts traditional constructionsubcontractor relationships from its reach," DwayneMcKenzie of Cox, Castle & Nicholson,tells GlobeSt.com. "AB 5 states that the ABC test of the Dynamexdecision does not apply to the relationship between a contractorand an individual who is performing work under a subcontract, solong as a number of specific requirements are all satisfied,including that the subcontract is in writing, that thesubcontractor is licensed by the Contractors State License Boardand that the work is within the scope of such license. The law alsorecognizes that other professionals in the construction industry,including architects, engineers, and lawyers, are exempt from thethree-factor test."

However, it might be too early to breath easy. Trucking is morecomplicated, and for owner-operator trucks, the law could have animpact. "Treatment of owner-operators of trucks and other equipmentis a significant issue, since they do not fit within thesubcontractor exemption," says McKenzie. "Although an additionalexemption for "construction trucking services" was included in AB5, it essentially prevents the use of brokers, which will createsignificant issues for contractors seeking to useowner-operators."