Q: What are the details of Assembly Bill (AB) 2257 and how does it change the way I utilize independent contractors?

A: On September 4, 2020, Gov. Gavin Newsom signed Assembly Bill (AB) 2257, which substantially revises and clarifies the exemptions to AB 5, a recently passed California statute that effectively precludes many industries from being able to utilize independent contractors.

AB 5 was signed into law on January 1, 2020, and requires using the “ABC Test” to determine whether a worker in California is an employee or independent contractor under the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission wage orders. Under the ABC Test, to defeat claims premised on independent contractor misclassification, a defendant must demonstrate: (A) the worker is free from control and direction of the hiring entity in connection with performing the work, both under contract and in fact; (B) the worker performs work outside the usual course of the hiring entity’s business, and; (C) the worker customarily engages in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. Many industries have complained about component (B), which effectively precludes independent contractors from performing work in the business of the hiring company.
Continue Reading AB 2257: A Significant Expansion of California Independent Contractor Laws