Understanding Assembly Bill 2257: A Comprehensive Guide

The “ABC” test continues to be the de facto standard for determining who is an independent contractor and who is an employee under Assembly Bill 2257. While AB2257 does not modify the fundamental structure of AB5, it does include several new statutory exemptions from the “ABC” test that, where appropriate, also apply retrospectively. Following vigorous lobbying and public relations campaigns from numerous businesses within the sectors that are now exempt, this new law was passed. Here are the primary modifications brought forth by Assembly Bill 2257:

Business-to-Business Exemption 

AB2257 maintains the exemption for “bona fide B2B contracting relationships” where a contractor should act “as a solitary owner, or a business entity formed as an association, limited harm company, limited liability collaboration, or corporation agreements to provide services to another such business.”

The 12 requirements for this exemption still need to be completed by the worker to qualify, no matter how slight any conditions may be. Because many business-to-business independent contractor arrangements cannot meet even one of the standards, they may still need help to benefit from this exception.

Exemption for “Single-Engagement” Business-to-Business Contracts 

AB2257 establishes an exemption for individual businesspeople who enter into agreements with one another “for providing services at the location of a single-engagement event.” If specific requirements are met, the “ABC” test will not be applicable when one person contracts with another to provide services at “a one-time non-repetitive event in a single place, or a series of events in the same place no more than once a week.”

Referral Agency Exemption 

AB2257 clarifies the referral agency exemption, under which organizations that recommend a person’s services to customers in a specific industry may be exempt from the “ABC” test.

First, AB2257 dramatically broadens the referral agency exemption by adding new services that will now be subject to the “Borello” test, such as advising, coaching minor sports, caddying, arranging weddings or events, services offered by wedding and event vendors, and interpreting services. One of the most important modifications to AB2257 was this enlargement.

Nevertheless, AB2257 makes it clear that independent contractors working in the following industries are not eligible for the referral agency exemption:

• The following ten industries are also included: janitorial, delivery, courier, transportation, trucking, agricultural labor, retail, logging, in-home care, and construction services other than minor house repair. 
• “Industries designated by [two designated state agencies] as a high hazard industry” is another group.

Second, the exemption now contains 11 conditions instead of the ten requirements that referral agencies had to satisfy to be eligible. Only a small number of referral organizations will likely be able to meet all the criteria for the exemption.

Service Providers Are Exempt

The list of professions that may be exempt from the “ABC” test following the professional services exemption is already rather long, and AB2257 adds to it. Due to AB2257, the following newly created professions might be subject to the “Borello” test for employment: 

Specialist performers hired to teach a lesson for up to a week; content writers, advisers, producers, narrators, or cartographers for specific publications; appraisers; qualified professional foresters; and home inspectors. 

AB2257 also repeals AB5 regulations that put the journalism sector in danger. Under AB5, there were restrictions on how many “submissions” different kinds of independent contractors (including still photographers and photojournalists, videographers, photo editors, freelance writers, translators, editors/copy editors, and illustrators/newspaper cartoonists) could publish in a single forum without losing their contractor status. The submission cap is now eliminated by AB2257, which mandates that companies refrain from laying off current workers to hire one of these categories of contractors.

Performing arts and the music industry Exemptions. 

According to AB 2257, the music sector gains several new exemptions:

Recording artists, songwriters, lyricists, composers, proofreaders, managers of recording artists, record producers and directors, musical engineers and mixers, musicians, vocalists, photographers, independent radio promoters, and specific categories of publicists are among the careers exempt from the ABC test.

As long as they adhere to specified requirements, musicians and musical groups hired for a one-engagement live performance event are exempt from the ABC test.

Individual performers who perform their creative works, such as comedians, improvisers, magicians and illusionists, mimes, spoken-word artists, storytellers, and puppeteers, are eligible for an exemption if certain conditions are met.

Additional New Exemptions

AB 2257 adds several new exemptions, including those for competition judges (including amateur umpires and referees), manufactured house salespeople, and some people employed by overseas exchange visitor programs.