A Running List of AB5 Exempt Occupations
Governor Newsom signed AB 2257 into law slightly modifying AB 5's strenuous ABC test allowing for more jobs to be exempt. A little history- prior to AB 5's ABC Test from the Dynamex Case the test to determine if someone was an employee or independent contractor was held to the Borello test since 1989. The Borello test is multi-factor and allows for more people to be deemed independent contrators. AB 2257 has reincorporated that test for certain occupations. The goal of AB 2257 is to undue the "job killing" that arose from AB 5, which I believe this definitely helps. However, there is still much more progress that needs to be made with balancing the economic needs of both people and business.
The hiring entity always bears the burden of proving the individual is an independent contractor and not an employee. The ABC test and the Borello test apply to different occupations, as outlined in AB 2257.
Because AB 5 was heavily contested and has since seen many new laws modifying it for simplicity below is the running list of jobs that can be found potentially exempt under AB 5.
Potentially Exempt Occupations
Veterinarians licensed by the State of California
Certain Direct Salespersons
Real Estate Agents
Commercial Fishers working on American vessels (until January 1, 2023).
Enrolled Agents Service Providers
Licensed Manicurists (until January 1, 2022)
Newspaper Carriers (until January 1, 2021)
Real Estate Appraisers
Manufactured Housing Salespersons
International Exchange Visitors
Specialized Performers teaching a master class
Musical Groups or Musicians for single-engagement live performance events
The ABC Test
The purported contractor is:
(A) free from control and direction by the hiring entity both under the contract and in the performance of the work;
(B) that the work being performed is outside of the usual course of the hiring entity’s business; and
(C) that the person is customarily engaged in performing work of the same nature as an independently established trade, occupation or business.
The Borello Test- The Main Factors
(1) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
(2) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business. This subparagraph does not apply if the business service provider’s employees are solely performing the services under the contract under the name of the business service provider and the business service provider regularly contracts with other businesses.
(3) The contract with the business service provider is in writing and specifies the payment amount, including any applicable rate of pay, for services to be performed, as well as the due date of payment for such services.
(4) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.
(5) The business service provider maintains a business location, which may include the business service provider’s residence, that is separate from the business or work location of the contracting business.
(6) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.
(7) The business service provider can contract with other businesses to provide the same or similar services and maintain a clientele without restrictions from the hiring entity.
(8) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.
(9) Consistent with the nature of the work, the business service provider provides its own tools, vehicles, and equipment to perform the services, not including any proprietary materials that may be necessary to perform the services under the contract.
(10) The business service provider can negotiate its own rates.
(11) Consistent with the nature of the work, the business service provider can set its own hours and location of work.
AB 2257 is no less confusing than AB 5. Like all California employment laws, these new exemptions have strings attached, such as certain contracts must be in place with specific provisions. If you are hiring someone and are unsure if they are an employee or independent contract you should talk to an employment lawyer, like myself. You may reach me by phone at 818-306-0686 or by email at email@example.com
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The information in this post is for general information purposes only. Nothing on this post should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.