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California Independent Contractor Law Update: Retroactivity and Exemptions

EverythingHR Staff | 01/28/2021 | Blog, Featured

You learned the common law of Borello.  You have been learning the ABCs of Dynamex.  Now it is time to get introduced to the retroactivity of Vasquez.

Since the Dynamex decision in April 2018, California employers have been waiting (probably with a sense of realism-infused dread) to get clarification as to whether or not the ruling’s ABC test for independent contractor determination (later codified under AB 5) would be applied retroactively.  On January 14th, the CA Supreme Court issued its decision in Vasquez v. Jan-Pro Franchising, Inc., and confirmed that the answer is (a not particularly surprising) – yes.  Dynamex, and the ABC test determination standard will apply retroactively.

The Supreme Court interpreted the Dynamex decision as resolving and interpreting an open “legal issue,” rather than overruling existing law.  This ruling means that claims dating back to before April 2018 can be evaluated under the ABC test, which could very possibly lead to a significant increase in misclassification claims.

And, as our customary reminder, Dynamex strengthened the presumption that a worker is an employee unless the hiring entity can meet three “prongs” to show that the worker is an independent contractor:

  1. Be free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.
  2. Perform work that is outside the usual course of the hiring entity’s business.
  3. Customarily be engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

In evaluating employment status, California employers should also be aware of the statutory exemptions from AB 5.  For those keeping score at home, in the wake of last year’s AB 2257, we are now up to 109 exemptions!

Please continue to our blog for a full list of the current statutory exemptions to AB 5.  The list includes both those included in AB 5 itself as well as those contained in AB 2257.

Exemptions from the California “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.