Employment Law Update: AB 2257 Part 1 - An Introduction & the Events Exemption
What is AB 2257? How is it related to AB 5?
AB 2257, signed into law last September, has updated the provisions of California’s Labor Code on determining whether a worker is an employee or an independent contractor. This measure provides several additional exemptions to those first created by the controversial AB 5. As a result, some of what small business owners and nonprofit leaders may have learned about AB 5 is already outdated. The good news, however, is that some of the newer provisions of law will be very useful to employers, especially small businesses and nonprofits.
AB 5, which went into effect at the beginning of 2020, uplifted and codified the ABC Test, a strict 3-part set of standards to determine if a worker is an independent contractor. You can review AB 5 with our now somewhat outdated blog posts, AB 5 Primer and More About AB 5. Note that the ABC Test in principle has not changed; rather, the exemptions from application of the ABC Test have moderately changed.
The ABC test still remains intact, but AB 2257 clarified and expanded many of the exemptions from the strict ABC Test. These include:
Business-to-business contracting relationships
Relationships between referral agencies and service providers
Writers, photographers, videographers, copyeditors, cartoonists and other content producers for news publications and similar types of enterprises, provided certain contractual terms and conditions are met (more in our next blog post)
Music industry professionals
Workers providing professional services at single-time events or a series of events recurring as often as one time per week
Our subsequent blog post elaborates on the professional services exemption, check it out here.
This is a very brief overview of all of the updates written into law by AB 2257, but we’ll be going more in-depth on a few specific exemptions. Below, we’ll begin with the events exemption because this will likely be a useful exemption for many nonprofit organizations and small businesses which host classes, performances, and other types of events.
The Events Exemption
AB 2257 includes an exemption for workers providing professional services at one-time events or a series of events occurring one time per week or less often [Labor Code Section 2779].
Individuals providing services may be considered independent contractors if all of the following conditions are met:
The individual isn’t subject to control or direction by the other with the performance of the work.
The individual is able to negotiate their pay.
The written contract specifies both a) the total payment for services provided by each contracting party and b) the specific rate paid to each party.
The individual maintains their own business location, which may include the individual’s personal residence.
The individual provides their own tools, vehicles, and equipment to perform services under the contract.
The individual has a business license, if required in the jurisdiction (note that most cities in California require business owners, including freelancers, solopreneurs, etc. to have a business license if they have a business location, including a home office, in that city).
The individual is customarily engaged in the same or similar type of work performed under the contract or each individual separately holds themselves out to other potential customers as available to perform the same type of work.
The individual can contract with other businesses to provide the same or similar services and maintain their own clientele without restrictions.
The individual performs the work as part of 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.
The individual is not providing services defined as “hazardous.”
Good news: this exemption can apply to individuals and groups, such as nonprofits or groups of individuals together facilitating one-time or a series of classes, shows, or other events.
Updated on November 3, 2021 to add written contract requirements to events exemption.