The video game industry is a rapidly growing and lucrative entertainment market. It has played an immense role in shaping the consumption of media. However, the reality of working conditions for the industry labor force largely behind these innovations is much less impressive. This Note examines the video game industry as a case study for the potential impact of California Assembly Bill 5 (“AB 5”) on industries that heavily rely on independent contractors with specialized skill sets.

First, this Note advances the argument that the video game industry has engaged in regulatory arbitrage by capitalizing on the loopholes created as a result of ambiguities in California employment classification laws. Since the three-prong “ABC” test from Dynamex Operations West, Incorporated v. Superior Court of Los Angeles introduces a stronger presumption of employee status, AB 5 will compel video game companies to adjust their policies to avoid misclassification penalties. Next, this Note predicts that widespread reclassification will bolster the movement to unionize industry workers. Lastly, this Note contends that the social and political costs of misclassification will soon outweigh its short-term gains for companies that could better serve their shareholders’ interests by operating under the theory of corporate social responsibility (“CSR”). As such, it is no longer sustainable for companies to tolerate strikes over mass layoffs, unflattering press coverage over “crunch” periods, worker burnout, and high turnover rates.