AB 2257 – New Exceptions to the ABC Test for Independent Contractors

AB 2257 – New Exceptions to the ABC Test for Independent Contractors
September 14, 2020 dmock2015

The continuing evolution of California law governing the classification of workers as employees or independent contractors took yet another confusing step on September 4, 2020, with Governor Newsom’s signature of AB 2257, a purported “revision and recast” of 2019’s well-known AB 5.  In reality, the new bill creates a host of exceptions to application of the “ABC test” first adopted in California by the State Supreme Court in the Dynamex decision and then significantly broadened to most all California workers by the Legislature in AB 5.  The law was drafted as an urgency statute and, thus, went into effect immediately upon the Governor’s signature.

It exempts a hodgepodge of occupations from the ABC test if they meet several criteria contained in the new law.  The details are too lengthy and vague for this summary, and a thorough review or consultation with employment counsel is warranted for those businesses seeking to determine if their workers or contractors qualify for an exemption from the ABC test.  In the event a position qualifies, the Borello test, which previously governed the classification of California workers as employees or independent contractors, would apply.

In brief, AB 2257 exempts the following jobs and occupations from the ABC test:

Certain occupations in connection with creating, marketing, promoting, or distributing sound recordings or musical compositions, musicians or musical groups for the purpose of a single-engagement live performance event, unless certain conditions outlined in the bill apply.  It also exempts an individual performance artist presenting material that is their original work and creative in character which depends primarily on the individual’s invention, imagination, or talent.

The bill also modifies the criteria for referral agencies and service providers to qualify for the exemption, providing that referral services such as graphic design, web design, photography, tutoring, consulting, youth sports coaching, caddying, wedding or event planning, services provided by wedding and event vendors, minor home repair, moving, errands, furniture assembly, animal services, dog walking, dog grooming, picture hanging, pool cleaning, yard cleanup, and interpreting services qualify for the exemption, but referral services such as janitorial, delivery, courier, transportation, trucking, agricultural labor, retail, logging, in-home care, or construction services other than minor home repair do not qualify.  The bill also creates an exemption for business-to-business relationships between two or more sole proprietors, modifying the exemption as stated in AB 5.

AB 2257 also exempts services provided by a still photographer, photojournalist, videographer, or photo editor who works under a written contract that specifies certain terms called out in the law.  It also establishes an exemption for services provided to a digital content aggregator (one who is a licensing intermediary for purposes of distributing photo, video or digital content), a still photographer, photojournalist, videographer, or photo editor. The bill also exempts services provided by a fine artist, freelance writer, translator, editor, content contributor, advisor, narrator, cartographer, producer, copy editor, illustrator, or newspaper cartoonist who works under a written contract that specifies certain terms.

The new law also exempts from the ABC test workers who provide underwriting inspections and other services for the insurance industry, manufactured housing salespersons, people engaged by an international exchange visitor program, individuals who provide certain consulting services, animal services, and competition judges (such as amateur umpires and referees).  It also creates exceptions for licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators (i.e., businesses, research institutions, or organizations that request and gather feedback on user interface, products, services, people, concepts, ideas, offerings, or experiences from individuals willing to provide it).

Lastly, AB 2257 authorizes a district attorney to prosecute an action for injunctive relief, in addition to the Attorney General and certain city attorneys.

It remains to be seen if there are further revisions to application of the ABC and Borello tests as continued lobbying, political pressures and favors take place after the upcoming elections.  For the time being, California employers and workers are left with no simple answers and a confusing and burdensome landscape.  If you have questions regarding the application of AB 2257 to your business, please contact your Delfino Madden employment attorney.