California Exempts Additional Occupations from Independent Contractor Classification Test (AB 5)

On Sept. 4, 2020, California amended the list of occupations exempted from using the state’s employee classification test, also known as “the ABC test” (AB 5). When the ABC test is not required, including when an exemption applies, employers may need to revert to previous methods to determine whether a worker is an employee or an independent contractor.

Modified List of Exempt Occupations

The amendments modified the business-to-business, referral agency and freelance writer exemptions. The amendments also added the following new exemptions (see full text for details):

• Recording artists, songwriters, lyricists, composers and related occupations;
• Musicians (for single-engagement live performance event);
• Individual performance artists;
• Licensed landscape architects;
• Freelance translators;
• Registered professional foresters;
• Home inspectors and persons who provide underwriting inspections, premium audits, risk management or loss-control work for the insurance industry;
• Manufactured housing salespersons;
• Persons engaged in conducting international and cultural exchange visitor programs;
• Competition judges with specialized skill sets;
• Digital content aggregators who serve as licensing intermediaries for digital content;
• Specialized performers hired to teach a master class for no more than one week; and
• Feedback aggregators.

For companies like Uber, Lyft and DoorDash, Californians will vote on the issue this fall in Proposition 22.  

CHANGES EMPLOYMENT CLASSIFICATION RULES FOR APP-BASED TRANSPORTATION AND DELIVERY DRIVERS. INITIATIVE STATUTE.   

Establishes different criteria for determining whether app-based transportation (rideshare) and delivery drivers are “employees” or “independent contractors.” Independent contractors are not entitled to certain state-law protections afforded employees—including minimum wage, overtime, unemployment insurance, and workers’ compensation. Instead, companies with independent-contractor drivers will be required to provide specified alternative benefits, including: minimum compensation and healthcare subsidies based on engaged driving time, vehicle insurance, safety training, and sexual harassment policies. Restricts local regulation of app-based drivers; criminalizes impersonation of such drivers; requires background checks. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Increase in state personal income tax revenue of an unknown amount.