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AB-25 Worker classification: employees and independent contractors.(2021-2022)



Current Version: 12/07/20 - Introduced Compare Versions information image


AB25:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 25


Introduced by Assembly Member Kiley

December 07, 2020


An act to amend Section 2750.5 of, to add Section 2750.7 to, and to repeal Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of, the Labor Code, relating to employment.


LEGISLATIVE COUNSEL'S DIGEST


AB 25, as introduced, Kiley. Worker classification: employees and independent contractors.
Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.
Existing law exempts specified occupations and business relationships from the application of the ABC test described above. Existing law, instead, provides that these exempt relationships are governed by the multifactor test previously adopted in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).
This bill would generally repeal provisions relating to the “ABC” test for various specified occupations and business relationships. The bill would, instead, require the determination of whether a person is an employee or an independent contractor to be based on the specific multifactor test set forth in Borello, including whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired, and other identified factors. The bill would make related, conforming changes.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 2750.5 of the Labor Code is amended to read:

2750.5.
 There is a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:

(a)That the individual has the right to control and discretion as to the manner of performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.

(b)That the individual is customarily engaged in an independently established business.

(c)That the individual’s independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principal’s work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract.

In

(a) In addition to the factors contained in subdivisions (a), (b), and (c), Section 2750.7, any person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors’ license as a condition of having independent contractor status.

For

(b) For purposes of workers’ compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.

SEC. 2.

 Section 2750.7 is added to the Labor Code, to read:

2750.7.
 (a) Notwithstanding any other law, except for Chapter 10.5 (commencing with Section 7448) of Division 3 of the Business and Professions Code, as added by Proposition 22 of the November 3, 2020, general election, a determination of whether a person is an employee or an independent contractor for the purposes of this division shall be based on the multifactor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations.
(b) These factors include, but are not limited to, the following:
(1) Whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired, which is the principal factor.
(2) Whether the one performing services is engaged in a distinct occupation or business.
(3) The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision.
(4) The skill required in the particular occupation.
(5) Whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work.
(6) The length of time for which the services are to be performed.
(7) The method of payment, whether by the time or by the job.
(8) The right to discharge at will, without cause.
(9) Whether or not the work is part of the regular business of the principal.
(10) Whether or not the parties believe they are creating the relationship of employer-employee.
(c) The individual factors set forth in subdivision (b) above shall not be applied mechanically as separate tests, but shall be intertwined.
(d) The test set forth in this section shall apply to any determinations before an administrative agency or court.

SEC. 3.

 Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of the Labor Code, as added by Section 2 of Chapter 38 of the Statutes of 2020, is repealed.