On September 4, 2020, Governor Newsom signed into law AB 2257, which exempts several additional occupations from the ABC Test under AB 5, and attempts to further clarify the distinction between employer-employee relationships and professionals that run their own independent businesses. AB 2257 is a lengthy bill that made several significant changes. We have summarized some of the more important ones below for everyone’s immediate information.
Business-to-Business Contracting: The bill makes about nine different changes to the business-to-business exemption in an attempt to make the complicated multi-factor test more workable. For example, prior to the amendment a contractor must actually contract with other businesses to provide services and maintain a clientele without restrictions from the hiring entity. That language was changed to allow for more flexibility. Under the amended test, a contractor need only have the opportunity for such contracts, and not actually have contracted with other businesses. However, critics of the new untested language argue that the ambiguous phrasing extends the application of the ABC Test to the workers for the contractor with respect to their employment status with both the contractor and hiring entity.
Referral Agency Contracting with Businesses: The amendments permit additional service providers to qualify under the referral agency exemption, including consulting, youth sports coaching, caddying, wedding planning, and interpreting services. However, the revised language also specifically lists services that cannot qualify under this exemption, including, high-hazard industry services, janitorial, delivery, courier, transportation, trucking, agricultural labor, retail, logging, in-home care, or construction services other than minor home repair. The service providers will still have to satisfy a multi-factor test in order to be exempt from the ABC Test.
Additional Exceptions to AB 5: AB 2257 eliminated the 35-per-year submission limit placed on freelance writers, but replaced it was some other specific requirements that must be met. It also carved out several other occupations that may be exempt from the ABC Test under certain circumstances, including:
* Recording artists, songwriters, lyricists, composers, proofers,
managers of recording artists, record producers and directors,
musical engineers, musicians engaged in creating sound recordings,
vocalists, photographers working on album covers, and other press
and publicity photos relating to recordings, and independent radio
* Musicians or musical groups for the purpose of a single-engagement
live performance event;
* An individual performance artist;
* Licensed landscape architects;
* Freelance translators;
* Registered professional foresters;
* Home inspectors;
* Persons who provide underwriting inspections, premium audits, risk
management or loss-control work for the insurance industry;
* Manufactured housing salespersons;
* Persons engaged in conducting international and cultural exchange
* Competition judges with specialized skill sets;
* Digital content aggregators who serve as licensing intermediaries for
* Specialized performer hired to teach a master class for no more
than one week; and
* Data aggregators.
It is important to keep in mind that even if a worker falls under an exemption to AB 5, they are still subject to the often cumbersome, yet more practical Borello test used to determine employment status. The full extent of AB 2257 is much too lengthy to cover here. It provided a multitude of revisions and amendments to an already complicated and ambiguous AB 5.
As always, if you have any questions about determining the employment status of your workers, please contact Nicholas Roxborough at (818) 992-9999, ext. 222, Drew Pomerance at ext. 212, Michael Adreani, at ext. 234, Marina Vitek, at ext. 236, Trevor Witt, at ext. 224, or David Ginsburg at ext. 228.