California AB 5 Gig Worker Law, Exemptions, ABC Test

This article is not legal advice. I am not an attorney, and don’t even need this disclaimer, but it’s here because it may give the impression that I know what I’m talking about. I repeat: this is not legal advice. It is for entertainment and education purposes only.

The controversial law AB5 changed the way people were determined to be independent contractors. This was seen largely as a way to address the issues of “gig worker” abuse. However, it has also impacted writers, musicians, truckers, and others who also operate as independent contractors.

This mini-website is structured like a “choose your own adventure”, to navigate the text of the law.

Question 1: Are You Exempt?

Several types of businesses are exempted from this law. There are two groups of businesses or individuals who are exempt. This is the first list of exemptions, taken from the text of the law.

  • (1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.
  • (2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.
  • (3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.
  • (4) A securities broker-dealer or investment adviser or their agents and representatives that are registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.
  • (5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.
  • (6) A commercial fisherman working on an American vessel as defined in… (See the text of the law.)

If you are exempt, you are finished.

If you are not operating a biz in the above list, go on to the second list of possible exemptions.

References

The text of the law, at leginfo.gov.

The Dynamex decision.

https://www.dir.ca.gov/dlse/FAQ_IndependentContractor.htm

Borello v. DIR decision.