Below are simplified versions of each test, presented to help you understand the general scope of AB5. Any determination of employee or contractor status should be done using the text of the legislation itself, in consultation with an employment law professional.
THE ABC TEST (THE CALIFORNIA DYNAMEX TEST)
The ABC test is the main way the Labor Code determines whether a worker is an employee or a contractor. A worker is to be classified as an employee unless all of the following conditions are satisfied:
(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
(B) The person performs work that is outside the usual course of the hiring entity’s business.
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
THE BORELLO TEST
The Borello Test is used for workers who do not meet the requirements of the ABC test, but work in specialized “lofty” professions that still allow them to operate as contractors, including:
A worker may retain contractor status if they are a:
- Licensed insurance salesman or broker.
- Physician and surgeon, dentist, podiatrist, psychologist, or veterinarian.
- Lawyer, architect, engineer, private investigator, or accountant.
- Securities broker-dealer or investment adviser.
- Direct sales salesperson.
- Commercial fisherman working on an American vessel
Additional workers may retain contractor status if they engage in one of the following listed professions
Marketing, Travel agent services, Graphic design, Grant writer, Fine artist, Enrolled Agent, Payment processing agent, Still photographer or Photojournalist, Freelance writer, editor, or newspaper cartoonist, and Licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist
… and satisfy all of these six additional factors:
- There maintain an outside business location
- They have a business or professional license
- They negotiate their own rates or payments
- Outside of project completion dates and reasonable business hours, the individual has the ability to set the individual’s own hours.
- The individual is engaged in the same type of work or holds themselves out to other potential customers as available to perform the same type of work.
- The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.