Governor Expands Exemptions to California’s Independent Contractor Law
One of the first employment-related bills signed by Governor Newsom this legislative session was Assembly Bill (“AB”) 2257, which recasts, clarifies, and expands exemptions to AB 5, last year’s bill relating to independent contractors.
In September 2019, Governor Newsom signed into law AB 5, which codified the “ABC Test” adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (2018), to determine whether a worker should be classified as an independent contractor or employee. Under the ABC Test, a worker is presumed to be an employee unless the hiring entity can establish three factors. When the Legislature passed AB 5, it included certain exemptions: if a worker falls within one of the exemptions, then the worker’s status as an employee or independent contractor is determined using the less stringent multi-factor test established in S. G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989).
AB 2257’s changes to the existing exemptions include:
Referral Agency Exemption: Expands and clarifies the types of services covered by the exemption, including adding youth sports coaching, interpreting services, and consulting services. Clarifies that the exemption does not apply to referrals for services provided in certain high hazard industries and referrals for businesses that provide janitorial, delivery, courier, transportation, trucking, agricultural labor, retail, logging, in-home care, or constructions services other than minor home repair.
Professional Services Exemption: Expands and clarifies the exemption as it applies to photographers, photojournalists, videographers, and photo editors, and expands the exemption to include “master class” instructors, appraisers, registered professional foresters, and home inspectors.
Exemption for Certain Occupations: Broadens the scope of occupations exempt from AB 5 to include landscape architects, manufactured housing salespersons, competition judges, and individuals providing underwriting inspections, premium audits, risk management, or loss control work for insurance and financial service industries.
AB 2257 also establishes new exemptions for certain individual performance artists as well as occupations related to the creating, marketing, promotion, and distribution of sound recordings and musical compositions, including certain recording artists, vocalists, and musicians, managers of recording artists, and record producers.
Both the existing and the new exemptions to AB 5 contain specific requirements that must be met before an exemption will apply to a worker.
AB 2257 was effective immediately upon the Governor’s signing of the bill.