AB5 Amendments Expand Exemptions to the ABC Independent Contractor Test


By Ward Heinrichs Esq., San Diego Employment Attorney


BIG BLEND RADIO INTERVIEW: Attorney Ward Heinrichs explains the latest AB5 amendments and exemption expansions to the ABC Independent Contractor Test. Listen / download the interview podcast on Spreaker.com, SoundCloud.com, YouTube.com or on BlogTalkRadio.com.


Before COVID-19, AB5 dominated most California employment law conversations.  If you don’t remember, AB5 ushered in the new ABC test used to determine who is, and who is not, an independent contractor. Various groups of workers did not like that AB5 forced them to be employees. In many of those cases, the workers actually made more money, and had greater flexibility, as independent contractors. Other workers suffered job losses because the businesses that used their services needed to consolidate its workforce to accommodate AB5. For instance, many freelance workers faced serious revenue loss and/or unemployment. To make matters worse, most of them would not qualify for state unemployment benefits.

In response to the above outcry, the governor signed legislation (AB 2257) on September 4, 2020, exempting more workers from AB5. It was emergency legislation, so it immediately took effect. The bottom line: Many more workers will continue to work as independent contractors.

The Business to Business exemption did not change much.  The new law clarified some requirements and added public agencies and quasi-public corporations to the types of businesses that can apply for the exemption. More importantly, now a business providing services under a written agreement with another business may provide those services directly to customers of that other business if it meets certain requirements.

Referral agencies may now refer clients to more types of businesses than before. Of course, they must first meet the 11 requirements to qualify as referral agencies. Those requirements ensure that the referral agencies are truly independent businesses that refer clients to qualifying service providers.

Now referral agencies may refer customers to businesses that provide the following newly recognized services: graphic design, web design, photography, tutoring, consulting, youth sports coaching, caddying, wedding & event planning, other wedding and event services, yard cleanup, and interpreting services. Clients can be businesses looking for these services through a referral agency, but those businesses must seek services that they normally do not provide themselves or that are outside the usual course of their business.  The client, not the service provider, must pay any referral service fee.

The new legislation expanded the definition of Professional Services and other specialized professions (¶ 2783 professions), to include: freelance writer, photojournalist, photographer, videographer, photo editor, digital content aggregator, content contributor, advisor, producer, narrator, cartographer, master classes taught by a specialized performer, registered forester, real estate appraiser, home inspector, translator, editor, copy editor, illustrator, newspaper cartoonist, licensed landscape architect, manufactured housing sales, competition judge, and amateur umpire and referee.

The Music Industry was granted many broad exemptions.  Professions involved in creating, promoting, distributing, and recording musical compositions may now be exempt, including: artists, composers, proofers, producers, sound engineers, album photographers, etc.  Think of professions that contribute to creating the music and getting it out to the public.  Musicians and musical groups who perform single-engagement live performance events are also exempt, but they must perform in smaller venues and may not perform in a symphony, theme park, or musical theater production.

Non-musical, individual Performing Artists are also exempt when using their own creative material. The types of professions included in this exemption are: comedy, improv, stage magic, illusion, mime, spoken word, storytelling, and puppetry.

Single Engagement Events, not related to music or performing arts, can also be exempt from AB5. The business engaging in single engagement events must be an independent business that meets 8 requirements listed in AB5.  “Single Engagement Event” means: a stand-alone non-recurring event in a single location, or a series of events in the same location no more than once a week.

All of the above exemptions have restrictions and requirements not addressed here. To learn about those, either review the AB 2257 language or ask an employment attorney!

Based in San Diego, California the Employment Law Office of Ward Heinrichs represents both employers and employees in almost all areas of labor law. He and his firm litigate cases that have been filed in many different parts of California. Visit www.BestEmploymentAttorneySanDiego.com


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About the Author:

Based in San Diego, California the Employment Law Office of Ward Heinrichs represents both employers and employees in almost all areas of labor law. He and his firm litigate cases that have been filed in many different parts of California.

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