California Governor Signs Legislation to Relax Controversial Independent Contractor Law
California Governor Gavin Newsom recently signed legislation, AB 2257, that provides a carve out to the state’s independent contractor law. Under Assembly Bill 5, all independent contractors are presumed to be employees unless the hiring business can meet the stringent requirements (known as the ABC test) that are set forth in the California Supreme Court’s Dynamex decision. AB 5 also provided for certain exemptions for certain categories of workers. For a more in depth discussion of AB 5, visit our previous blog post here.
AB 2257 provides new exemptions for additional types of workers, including music industry professionals; performing artists; freelance writers and photographers; individuals who provide underwriting inspections, premium audits, risk management or loss-control work for insurance or financial services industries; and performance artists. As such, more individuals will be able to work as independent contractors, and those who hire them will not be subject to the stringent workplace protection laws that apply to California employees.
The new law also provides clearer instruction on the “business-to-business” exception of AB 5 by stating that a business that is contracted to provide services to another business is an independent contractor if it meets the factors established in the California Supreme Court’s decision in S.G. Borello & Sons, Inc., which is less restrictive than the ABC test. Contracting businesses can include public agencies and quasi-public corporations.
AB 2257 was signed on September 4, 2020. Its provisions took effect immediately.