The California Supreme Court established the Borello test in S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations in 1989. This test relies upon multiple factors to make the determination of whether a worker is properly classified, including whether the potential employer has control over the manner and means of accomplishing the result desired, although such control need not be direct, actually exercised, or detailed. This factor, which is not dispositive, must be considered along with other factors, which include: […]

The ABC test does not apply if an individual acting as a sole proprietor, or a business entity formed as a partnership, limited liability company, limited liability partnership, or corporation (“service provider”) provides services to clients through a referral agency. Instead, the workers classification as an employee or independent contractor of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied: […]

The ABC Test does not apply to a “bona fide business-to-business contracting relationship.” If an individual acting as a sole proprietor, or a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation (“business service provider”) contracts to provide services to another such business or to a public agency or quasi-public corporation (“contracting business”), the Borello test will apply if the contracting business demonstrates that all of the following criteria are satisfied: […]

The ABC Test does not apply to a contract for “professional services” as defined below. “Professional services” means services that meet any of the following: […]

AB 2257, follow up legislation to AB 5, was signed by Governor Newsom on September 4, 2020 and goes into effect immediately. The law includes new exemptions for musicians, performing artists and fine artists. Learn more about these new exemptions in this webinar moderated by Julie Baker, Executive Director, California Arts Advocates/Californians for the Arts; guest speakers Assemblywoman Lorena Gonzalez, 80th District, Author AB 5 and AB 2257; Assembly Majority Leader Ian C. Calderon, 57th District, Principal Co-author AB 2257; John Acosta, President, AFM Local 47; and Sara B. Boyns, Attorney, Fenton & Keller.

These changes create additional opportunities for individuals, especially those involved in translation/interpretation and the music industry, to remain independent contractors. Specifically, AB 2257 recasts AB 5’s professional services exemption, referral agency exemption, and business-to-business exemption, and additionally encompasses a number of specific occupations that now will fall outside the reach of the ABC test.

As the California Legislative Session concluded on August 31, the Legislature adopted AB 2257 (Gonzalez) and Governor Newsom signed the measure on September 4 as Chapter 38. The following is a review of the provisions of AB 2257. In Section One[2] of the bill, Labor Code Section 2750.3 was repealed.

AB 2257, the follow up legislation to AB 5, was signed by the Governor on September 1, 2020 and goes into effect immediately. The new law includes new exemptions for musicians, performing artists and fine artists.

SVCreates Workshop Materials and Resources include:

• Updates on AB-5: Navigating Employment Law for the Arts

  • Webinar recording

  • Slide presentation by Sara Boyns, Attorney, Fenton & Keller

  • Slide presentation by Julie Baker, Executive Director, Californians for the Arts

Effective immediately, AB 2257 significantly expands the types of business contracting relationships that would instead be governed by the previous Borello standard, creating multiple, reasonable pathways for businesses to comply with the law. At the same time, the legislation ensures workers who are subject to undue control and direction from their employer—or for any other reason, could not satisfy the previous Borello standard and would have been considered employees before Dynamex—are covered by the court’s ABC test.

For the specific details of each section of AB 2257, please see this online fact sheet.

An extensive toolkit for independent contractors, workers and organizations & hiring entities published on February 1, 2020 by California Lawyers for the Arts. DOWNLOAD the toolkit

How do you tell an employee from an independent contractor? It's often a difficult question, but it's one that has many serious implications. The IRS watches closely to make sure workers are classified correctly

View step-by-step directions for starting a business in the state of California with links to forms and other related information.

Section 2775 and the holding in Dynamex do not apply to the following occupations in connection with creating, marketing, promoting, or distributing sound recordings or musical compositions, and instead the holding in Borello shall apply to all of the following: […]

An act to add Article 1.5 (commencing with Section 2775) to Chapter 2 of Division 3 of, and to repeal Section 2750.3 of, the Labor Code, and to amend Sections 17020.12 and 23045.6 of, and to add Sections 18406, 21003.5, and 61001 to, the Revenue and Taxation Code, relating to employment, and declaring the urgency thereof, to take effect immediately.

From the office of Assemblywoman Lorena Gonzalez, 80th Assembly District.

It is important that you continue to let your state elected officials know the impact of AB 5 on your ability to work or sustain your organization. There is currently one bill, AB 2257 that includes amendments largely for musicians. California Arts Advocates supports these bills but also wants the legislature to know that further considerations still need to be made for other areas of the performing arts and in particular for workers connected to small budget community based tax-exempt organizations with budgets of $1 million and under who provide vital services and artistic programming to create cultural connections that serve all residents and provide an opportunity for work for emerging artists.

We appreciate that fine artists, musicians, performing artists and specialized performers teaching master classes have been granted flexibility in AB 2257. We also see that many of the arguments justifying these exemptions could also apply to more artists and cultural workers who are inherently not subject to control and direction by the hiring entity of a small budget community based arts organization and look forward to further exploration of this in the next legislative session.