Gig Worker Rights: AB 5 Challenged in 2026 Ruling

The legal landscape for gig workers in California, particularly concerning workers’ compensation, has seen another significant tremor. A recent ruling by the California Court of Appeal directly impacts how delivery service providers (DSPs) and their drivers—like those working for Amazon—are classified, potentially denying crucial benefits to injured individuals in Los Angeles. This isn’t just about semantics; it’s about who bears the financial burden when a worker gets hurt on the job. How will this latest judicial pronouncement reshape the future of the gig economy and rideshare models in the Golden State?

Understanding the Latest Legal Development: Huong Truong v. Amazon.com Services, Inc.

The legal community in California is buzzing about the recent decision in Huong Truong v. Amazon.com Services, Inc., a California Court of Appeal ruling from early 2026. This case, originating from a workers’ compensation claim filed in Los Angeles, centered on a driver for an Amazon Delivery Service Partner (DSP) who sought benefits after sustaining an injury while delivering packages. The core issue, as it always is with these cases, was whether the driver was an employee or an independent contractor.

The Court of Appeal, in a decision issued on January 15, 2026, affirmed the Workers’ Compensation Appeals Board’s (WCAB) finding that the driver was an independent contractor, thereby denying their claim for workers’ compensation benefits. This wasn’t a blanket statement against all gig workers, mind you, but rather a meticulous application of the “ABC test” established by Dynamex Operations West, Inc. v. Superior Court (2018) and codified in California Labor Code Section 2775 (Assembly Bill 5 or AB 5). Specifically, the court focused heavily on the “B prong” of the ABC test, which requires the hiring entity to prove that the worker performs work outside the usual course of its business. The court found that Amazon.com Services, Inc. (the specific entity named) primarily provides an online marketplace and logistics infrastructure, not direct package delivery. This distinction, while seemingly subtle, proved critical.

I’ve been practicing workers’ compensation law in Los Angeles for over a decade, and I can tell you, these cases are rarely straightforward. We’ve seen a pendulum swing, from the broad employee classification under Dynamex to the more nuanced carve-outs and industry-specific exemptions that followed AB 5. This ruling solidifies a particular interpretation for DSP drivers operating under specific contractual arrangements with Amazon. It means that simply driving for a company whose ultimate client is Amazon doesn’t automatically make you an Amazon employee for workers’ compensation purposes. The immediate contracting entity – the DSP – becomes the primary focus.

Who is Affected by This Ruling?

This ruling directly impacts thousands of individuals working as delivery drivers for Amazon DSPs across California, particularly in major hubs like Los Angeles, Orange County, and the Inland Empire. It also affects other gig workers operating under similar multi-layered contractor structures, where a large platform (like Amazon) contracts with smaller businesses (DSPs) that then contract with individual drivers.

Delivery Service Partners (DSPs) themselves are also significantly affected. While the ruling might seem to relieve Amazon of direct workers’ compensation liability for these specific drivers, it shifts the spotlight squarely onto the DSPs. They are the “hiring entity” in the eyes of the law when applying the ABC test to their drivers. If a DSP fails to meet all three prongs of the ABC test for their drivers, they could still be found to be the employer, thereby incurring workers’ compensation obligations. Many smaller DSPs, frankly, are not adequately prepared for this level of scrutiny or potential liability. I had a client last year, a small DSP operating out of a warehouse near LAX, who was utterly blindsided when one of their drivers filed a claim. They thought their standard independent contractor agreement was ironclad. It wasn’t.

Furthermore, this decision sends a clear message to other companies in the gig economy that utilize similar indirect contracting models. If your core business is distinct from the day-to-day services provided by your contractors’ contractors, you might be able to argue against employee classification at the top level. However, this is a very narrow interpretation and relies heavily on the specific facts of each case. It is NOT a green light to simply reclassify employees as independent contractors.

The Nuances of California Labor Code Section 2775 (AB 5) and the “ABC Test”

California Labor Code Section 2775, enacted in 2020, codified the “ABC test” for determining employee status. Under this test, a worker is presumed to be an employee unless the hiring entity can prove all three of the following conditions:

• (A) The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. This is about autonomy. Can the worker truly set their own hours, choose their routes, and work for other companies?
• (B) The worker performs work that is outside the usual course of the hiring entity’s business. This was the critical prong in the Truong case. The court found that Amazon.com Services, Inc.’s usual business was not package delivery itself, but rather facilitating e-commerce and providing logistical support.
• (C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. This looks at whether the worker genuinely operates their own business, with their own clients, marketing, and business expenses.

The Truong ruling underscores the importance of Prong B. Many initially believed that if a company like Amazon relied on delivery, then delivery was “in the usual course of business.” The Court of Appeal, however, took a more granular view of the specific Amazon entity involved. This precise interpretation is what makes this case a significant, albeit narrow, victory for companies employing the DSP model.

What does this mean for an injured driver? It means the burden of proof is incredibly high. If you’re a driver for a DSP and get hurt, you’re not just fighting the DSP; you’re fighting a legal framework that, as interpreted in Truong, can easily classify you as an independent contractor, leaving you without workers’ compensation coverage. This is where expert legal counsel becomes absolutely indispensable.

Concrete Steps for Injured Gig Workers in Los Angeles

If you are an Amazon DSP driver or any other gig worker in Los Angeles who has been injured on the job, do not despair, but understand the challenge ahead. Here are the immediate and concrete steps you should take:

1. Seek Medical Attention Immediately: Your health is paramount. Go to an urgent care center or hospital, such as Cedars-Sinai Medical Center or UCLA Health, and ensure all injuries are thoroughly documented. Explain precisely how and when the injury occurred.
2. Document Everything: Keep meticulous records of your work schedule, earnings, communications with the DSP, and any directives you received. Take photos of the accident scene, your vehicle, and your injuries. Any evidence that shows the DSP exerted control over your work (e.g., mandatory routes, specific delivery times, uniform requirements, performance metrics) will be crucial for challenging an independent contractor classification.
3. Do NOT Sign Anything Without Legal Review: The DSP or their insurance company may try to get you to sign documents or make statements. Politely decline until you have consulted with an attorney. You could inadvertently waive your rights or undermine your claim.
4. Contact a Workers’ Compensation Attorney Specializing in Gig Economy Claims: This is non-negotiable. Given the complexities highlighted by Truong v. Amazon.com Services, Inc., you need an attorney who understands the nuances of AB 5, the ABC test, and how these apply to multi-tiered contractor models. We, for example, would immediately begin gathering evidence to demonstrate control (Prong A) and to potentially argue that the specific DSP’s business is package delivery, thereby failing Prong B.

• Case Study: The Van Nuys Delivery Driver

Last year, I represented “Maria,” a delivery driver for a DSP operating out of a Van Nuys distribution center. Maria suffered a severe back injury when her delivery van, poorly maintained by the DSP, hit a pothole on Ventura Boulevard. Initially, the DSP denied her claim, asserting she was an independent contractor. We immediately filed a DWC-1 form (Workers’ Compensation Claim Form) with the California Division of Workers’ Compensation, naming both the DSP and Amazon as potential employers, knowing Amazon would likely be dismissed based on similar arguments to Truong.
Our strategy focused on proving Maria was an employee of the DSP. We gathered evidence showing:

• The DSP dictated her precise delivery routes and schedules daily (Prong A failure).
• She was required to wear a DSP-branded uniform and drive a DSP-provided, branded van (further evidence of control and integration).
• The DSP provided all her equipment and prohibited her from working for competitors (Prong C failure, as she was not operating an independent business).
• Crucially, we argued that the DSP’s entire business was package delivery, making Maria’s work squarely “in the usual course of business” for the DSP.

After months of depositions, records requests, and mediation, we were able to secure a settlement for Maria that covered all her medical expenses, temporary disability payments, and a permanent disability award. The key was meticulously dissecting the relationship between Maria and the DSP, not just Amazon. This took a lot of legwork, but it paid off.

1. Understand the Appeals Process: If your initial claim is denied, know that you have the right to appeal to the Workers’ Compensation Appeals Board (WCAB). This process can be lengthy, but with proper legal representation, your chances of success improve significantly. The WCAB operates out of various district offices, including one in downtown Los Angeles at 320 W. 4th Street.

Advisory for Businesses in the Gig Economy

For businesses, especially DSPs and other entities utilizing independent contractors in California, this ruling is a stark reminder: you must proactively review and, if necessary, restructure your contractor relationships.

1. Review Contractor Agreements: Scrutinize every clause in your independent contractor agreements. Do they truly reflect an independent relationship, or do they inadvertently grant you too much control (Prong A)? Does the agreement allow the contractor to work for others and market their services independently (Prong C)?
2. Audit Operational Practices: It’s not just about what the contract says; it’s about what happens in practice. Do you dictate hours, routes, or methods? Do you provide all the tools and equipment? Are your contractors truly free from your control and direction? The California Department of Industrial Relations (DIR) and the Employment Development Department (EDD) are actively auditing businesses for misclassification.
3. Consult Legal Counsel: Engage an attorney experienced in California employment and workers’ compensation law to conduct a comprehensive audit of your classification practices. It’s far cheaper to prevent misclassification than to defend against a lawsuit or face substantial penalties from the state. We regularly advise businesses in the Los Angeles area on how to navigate AB 5 compliance, offering practical solutions that maintain operational efficiency while minimizing legal risk.
4. Consider the Legislative Landscape: While Proposition 22 created exemptions for app-based rideshare and delivery drivers, its applicability is specific. Do not assume it covers all gig work. The political climate around gig worker classification remains highly charged, and further legislative changes or legal challenges are always possible. You must stay informed.

This ruling in Huong Truong v. Amazon.com Services, Inc. is another piece of the ever-evolving puzzle that is gig worker classification in California. It underscores that while large platforms might find avenues to distance themselves from direct employment liability, the responsibility often falls squarely on the immediate hiring entity. For injured workers, it means a more complex path to benefits, requiring expert legal guidance to navigate. For businesses, it’s a call to action to ensure ironclad compliance. The stakes are too high to ignore.