AB 5 ‘Fix:’ New Exemptions Added to California’s Independent Contractor Law

As many are aware, Assembly Bill 2257, by Assemblywoman Lorena Gonzalez (D-San Diego), was signed by Governor Gavin Newsom on September 4 as Chapter 38. As an urgency measure, the statute took effect immediately.

AB 2257 repealed Labor Code Section 2750.3, which was added to the Code by last year’s Assembly Bill 5. Instead, AB 2257 added Article 1.5 (commencing with Section 2775) to Chapter 2 of Division 3 of the Labor Code. In addition, AB 2257 amended Sections 17020.12 and 23045.6 and added Sections 18406, 21003.5, and 61001 to the Revenue and Taxation Code.

For those unfamiliar, in 2018, the California Supreme Court unanimously decided the Dynamex case and imposed a new “ABC Test,” which is a 3-part test that must be met in order for a worker to be properly classified as an independent contractor. In 2019, the Legislature adopted and the Governor signed AB 5 by Assembly Gonzalez to codify the ABC Test.

The codification in AB 5 expanded the ABC Test to apply to all purposes under the Labor Code, Unemployment Insurance Code, and IWC Wage Orders. AB 5 also included over fifty categories of workers who were exempted from this 3-prong test and instead subject to the prior Supreme Court decision which established the Borello case multi-factor test.

AB 2257 recast the statutory scheme and added over fifty more exemptions from the ABC Test into the California Labor Code. In addition, the new statute authorizes a district attorney to prosecute an action for injunctive relief.

Last year’s AB 5 had created 57 statutory exemptions from the “ABC Test.” The new referral agency code section as added by AB 2257 includes all workers, but excludes specified ones. In AB 5, this referral agency section listed only certain types of workers who were exempt under this particular exemption. Now, AB 2257 includes all of those workers, except it does not list house cleaning, and then the bill added 5 new types of workers.

Overall, this year’s AB 2257 added 53 new exemptions, for a total of 109 exemptions from the Dynamex decision and its ABC Test. The following are the statutory exemptions contained in AB 2257, set forth in the order in which they appear in the relevant sections of the Labor Code (along with a notation for those that were previously listed in last year’s AB 5):

AB 2257 (Gonzalez) Exemptions from the “ABC Test” 

[1] Bona fide business-to-business contracting relationship – previously contained in AB 5

[2] Relationship between a referral agency and a service provider

[3] Graphic design [for referrals] – previously contained in AB 5

[4] Web design – previously contained in AB 5

[5] Photography – previously contained in AB 5

[6] Tutoring – previously contained in AB 5

[7] Consulting

[8] Youth sports coaching

[9] Caddying

[10] Wedding planning

[11] event planning – previously contained in AB 5

[12] Services provided by wedding and event vendors

[13] Minor home repair – previously contained in AB 5

[14] Moving – previously contained in AB 5

[15] Errands – previously contained in AB 5

[16] Furniture assembly – previously contained in AB 5

[17] Animal services – previously contained in AB 5

[18] Dog walking – previously contained in AB 5

[19] Dog grooming – previously contained in AB 5

[20] Picture hanging – previously contained in AB 5

[21] Pool cleaning – previously contained in AB 5

[22] Yard cleanup – previously contained in AB 5

[23] Interpreting services

[24] “Professional services”

[25] Marketing – previously contained in AB 5

[26] Administrator of human resources – previously contained in AB 5

[27] Travel agent services – previously contained in AB 5

[28] Graphic design – previously contained in AB 5

[29] Grant writer – previously contained in AB 5

[30] Fine artist – previously contained in AB 5

[31] Services provided by an enrolled agent – previously contained in AB 5

[32] Payment processing agent through an independent sales organization – previously contained in AB 5

[33] Still photographer – previously contained in AB 5

[34] Photojournalist – previously contained in AB 5

[35] Videographer

[36] Photo editor who works under a written contract

[37] Digital content aggregator

[38] Freelance writer – previously contained in AB 5

[39] Translator

[40] Editor – previously contained in AB 5

[41] Copy editor

[42] Illustrator

[43] Newspaper cartoonist – previously contained in AB 5

[44] Content contributor

[45] Advisor

[46] Producer

[47] Narrator

[48] Cartographer

[49] Licensed esthetician – previously contained in AB 5

[50] Licensed electrologist – previously contained in AB 5

[51] Licensed manicurist – previously contained in AB 5

[52] Licensed barber – previously contained in AB 5

[53] Licensed cosmetologist – previously contained in AB 5

[54] A specialized performer

[55] Services provided by an appraiser

[56] Registered professional foresters

[57] A real estate licensee – previously contained in AB 5

[58] A home inspector

[59] A repossession agency – previously contained in AB 5

[60] Relationship between two individuals wherein each individual is acting as a sole proprietor or separate business entity

[61] Recording artists

[62] Songwriters

[63] Lyricists

[64] Composers

[65] Proofers

[66] Managers of recording artists

[67] Record producers

[68] Directors

[69] Musical engineers

[70] Mixers engaged n the creation of sound recordings

[71] Musicians engaged in the creation of sound recordings

[72] Vocalists

[73] Photographers working on recording photo shoots, album covers, and other press and publicity purposes

[74] Independent radio promoters

[75] Any other individual engaged to render any creative, production, marketing

[76] Musician

[77] Musical group

[78] An individual performance artist performing material that is their original work and creative in character

[79] Relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry – previously contained in AB 5

[80] Relationship between a data aggregator and an individual providing feedback

[81] A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621) – previously contained in AB 5

[82] A person or organization who is licensed by the Department of Insurance pursuant to Chapter 6 (commencing with Section 1760) – previously contained in AB 5

[83] A person or organization who is licensed by the Department of Insurance pursuant to Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code – previously contained in AB 5

[84] A person who provides underwriting inspections

[85] A person who provides premium audits

[86] A person who provides risk management

[87] A person who provides loss control work for the insurance and financial service industries

[88] A physician and surgeon – previously contained in AB 5

[89] Dentist – previously contained in AB 5

[90] Podiatrist – previously contained in AB 5

[91] Psychologist – previously contained in AB 5

[92] Veterinarian – previously contained in AB 5

[93] Lawyer – previously contained in AB 5

[94] Architect – previously contained in AB 5

[95] Landscape architect

[96] Engineer – previously contained in AB 5

[97] Private investigator – previously contained in AB 5

[98] Accountant – previously contained in AB 5

[99] A securities broker-dealer – previously contained in AB 5

[100] Investment adviser – previously contained in AB 5

[101] Agents and representatives of securities brokers and investment advisory – previously contained in AB 5

[102] A direct sales salesperson – previously contained in AB 5

[103] A manufactured housing salesperson

[104] A commercial fisher working on an American vessel – previously contained in AB 5

[105] A newspaper distributor

[106] A newspaper carrier

[107] An individual who is engaged by an international exchange visitor program

[108] A competition judge with a specialized skill set or expertise

[109] Relationship between a motor club holding a certificate of authority – previously contained in AB 5

The California Legislature reconvenes on December 7 for its next two-year session. There could be new legislation to create additional exemptions.