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The Industries and Professions Not Subject to California’s New Independent Contractor Restrictions

Effective January 1, 2020, Assembly Bill (AB) 5 will dramatically extend the ultra-strict Dynamex “ABC” test for independent contractor classification. See, California’s Independent Contractors, Endangered Species? (October, 2019).

However, a portion of AB-5, to become Labor Code section 2750.3(b), exempts several specific industries/licensed professionals from the ABC test.  The Borello multi-factor balancing test will continue to apply to these. See, Independent Contractor or Employee? (April, 2019).

  • Accountants
  • Architects
  • Commercial fishermen working on an American vessel (as further defined in AB-5)
  • Dentists
  • Direct sales salespersons (as described in Unemployment Insurance Code section 650)
  • Engineers
  • Insurance agents, investment advisors and other persons or organizations licensed by the California Department of Insurance
  • Lawyers
  • Physicians
  • Podiatrists
  • Private investigators
  • Psychologists
  • Securities broker-dealers or investment advisors or their agents and representatives
  • Surgeons
  • Veterinarians

This list is the pure product of the political process.  Those professions and avocations not exempt from AB-5’s incoming “clamp down” on independent contractor classification include acupuncturists, chiropractors, “enrolled agents” (federally authorized tax advisors), hygienists, optometrists, paralegals, nutritionists, and physical therapists.

To validly classify someone from one of the excluded occupations (accountant, architect, etc.) as independent, the hirer must show, case-by-case, that the greater weight of  Borello factors applies, including: ● no right to control the manner and means of the work; ● can only discharge the worker for cause; ● the worker’s engagement in a distinct occupation or business; ● no supervision over work performance; ● the worker must be skilled; ● the worker supplies the instruments, tools, and the place of work and invests in the job’s equipment, materials or helpers; ● limit on length of time for which the services are to be performed; ● method of payment is by the job, not hourly; ● the work is not connected with the hirer’s regular business; ● parties both agree to independent contractor status; and ● the worker can experience profit or loss.

Stay tuned for more articles covering AB-5’s further exceptions/carve-outs to the ABC test.

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth

October 9, 2019