California Exempts More Professions from Contractor Limitations
The changes will allow certain professionals to be classed as contractors without needing to pass the “ABC” test.
Last Friday, California Governor Greg Newsom passed a bill amending the state’s landmark labour law, Assembly Bill 5 (AB5), to exempt two dozen professions from its mandated “ABC” test for determining whether a worker can be classified as a contractor instead of a regular employee.
Passed last September, AB5 had a major effect on the Californian gig economy. Among its measures, which were made in response to widespread misclassification of employees as independent contractors who were not entitled to certain benefits or a minimum wage, was the inclusion of the “ABC” test that contractors must now pass to demonstrate their status.
The test asks that workers show that they are “free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business.”
The bill passed on Friday, Assembly Bill 2257, allows several professions to waive the test. Exempted professions include freelance writers, musicians, promoters, cosmetologists and distributors of sound recordings.
Also as part of AB 2257, businesses can now be contracted to provide services to the customers of another business, provided that the service provider’s employees work under their employer’s name, in addition to other criteria.
These changes take effect immediately.