California: Independent Contractor Evolution Continues

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September 4, 2020

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AB 2257 amends and reconfigures AB 5 to expand exceptions to the definition of “independent contractor,” which uses the ABC rule set forth in Dynamex, and reverts instead to the Borello test for those exceptions. Some of the expanded exceptions include the following:

  • Business-to-business relationships must meet a 12-factor test to then use the Borello test to determine independent contractor status. Additionally, the relationships must include sole proprietors or formed business entities, otherwise the ABC test must be followed.
  • Referral agency exception was expanded to include things like consulting, youth sports coaching, wedding planning, caddying, and interpreting services, consulting.
  • Professional services exception was expanded to include certain videographers and photo editors, specialized performers who teach “master classes,” and real estate appraisers. Additionally, some of the definitions for excepted professions were revised.
  • Miscellaneous services were identified as being subject to the Borello test, under qualifying circumstances, such as recording artists, musicians, performance artists, freelance writers and photographers, photojournalists, photo editors, videographers, and other content contributors, landscape architects, certain field services for the insurance and financial services industries, manufactured housing sales, single-engagement events, international and cultural exchange services, and competition judging.

Otherwise, the Dynamex test remains in effect. Notably, California Proposition 22 provides further exceptions to AB 5 for rideshare and delivery drivers, if passed by voters in November. Continue to look for updates on this topic.

Action Items

  1. Review AB 2257 here.
  2. Have independent contractor relationships reviewed by legal counsel.
  3. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2020 ManagEase

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