New Independent Contractor Classification Test

On September 18^th, California Governor Gavin Newsom signed legislation that adds the test for determining when a worker is an independent contractor to state law. Under AB 5, the state will adopt the “ABC” test established in Dynamex Operations West, Inc. v. Superior Court of Los Angeles and apply it to the law. AB 5 will go into effect on January 1^st, 2020 and is expected to have a major impact on gig-economy jobs because it threatens the flexibility and income opportunities for that particular employment model.

Although the California Chamber of Commerce will recognize the exemptions under AB 5, the agency doesn’t believe it does enough to address the issues today’s workforce contends with. According to the CalChamber, “The test set forth in the Dynamex ruling does not correctly contemplate the realities of the modern economy nor fairly consider the sweeping impracticalities it would bring to the California economy.”

The industries and professions listed below will all be exempt from the ABC test under AB 5:

• Physicians, surgeons, dentists, podiatrists, or psychologists
• Licensed realtors
• Insurance agents
• Direct sales salespersons
• Investment advisers and securities broker-dealers registered with the SEC FIRA or licensed by the state of California
• Licensed attorneys, architects, private investigators, accountants, and engineers
• Commercial fishermen working on American vessels
• Veterinarians
• Grant writers
• Graphic designers
• Fine artists
• Hair stylists/barbers, estheticians, cosmetologists, electrologists, and manicurists
• Repossession agencies
• Payment processing agents
• Photographers and photojournalists
• Freelance writers, editors, or newspaper cartoonists

After signing AB 5 into law, Governor Newsom triumphantly called it a significant step to “creating pathways for more workers to form a union, collectively bargain to earn more, and have a stronger voice at work — all while preserving flexibility and innovation.”