California 2019-2020 Regular Session

California Senate Bill SB997 Compare Versions

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1-Amended IN Senate June 10, 2020 Amended IN Senate March 26, 2020 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 997Introduced by Senator BorgeasFebruary 13, 2020 An act to amend Section 2750.3 of the Labor Code, relating to employment.LEGISLATIVE COUNSEL'S DIGESTSB 997, as amended, Borgeas. Worker status: employees and independent contractors.Existing law requires a 3-part test, commonly known as the ABC test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification. Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. This test is commonly known as the ABC test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.Existing law exempts specified occupations and business relationships from the application of the ABC test described above. these provisions. Existing law, instead, law instead provides that these exempt relationships are governed by the multifactor test previously established in the case of adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. Existing law provides that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. Existing law also provides that insofar as the application of the above exemptions would relieve an employer from liability, those provisions apply retroactively to existing claims and actions to the maximum extent permitted by law. Existing law provides that, notwithstanding the above retroactivity language, other provisions of this law apply to work performed on or after January 1, 2020. This bill would delete the above language providing that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law. The bill would also revise the above operative language to provide that the bills provisions apply only to work that was performed on or after the date the Dynamex decision was adopted, May 1, 2018. the holding in Dynamex does not apply to any work performed prior to April 30, 2018.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 2750.3 of the Labor Code is amended to read:2750.3. (a) (1) For purposes of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits.(II) The number of commercial fishermen who have their claims disputed.(III) The number of commercial fishermen who have their claims denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits.(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following:(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform.(II) For purposes of this clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that meets all of the following:(ia) Pertains to a specific event or specific subject.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted.(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year.(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that meets all of the following:(ia) Pertains to a specific event or topic.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows:(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code.(B) For purposes of workers compensation by Section 3200 et seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i)(1)The provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2)(i) (1) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(2) Except as provided in paragraph (1), this section shall only apply to work performed on or after January 1, 2020.(j) The holding in Dynamex does not apply to any work performed prior to April 30, 2018. (j)(k) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
1+Amended IN Senate March 26, 2020 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 997Introduced by Senator BorgeasFebruary 13, 2020 An act to amend Section 11340 of the Government Code, relating to state government. 2750.3 of the Labor Code, relating to employment.LEGISLATIVE COUNSEL'S DIGESTSB 997, as amended, Borgeas. Administrative regulations. Worker status: independent contractors.Existing law requires a 3-part test, commonly known as the ABC test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification. Existing law exempts specified occupations and business relationships from the application of the ABC test described above. Existing law, instead, provides that these exempt relationships are governed by the multifactor test previously established in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. Existing law provides that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. Existing law also provides that insofar as the application of the above exemptions would relieve an employer from liability, those provisions apply retroactively to existing claims and actions to the maximum extent permitted by law. Existing law provides that, notwithstanding the above retroactivity language, other provisions of this law apply to work performed on or after January 1, 2020. This bill would delete the above language providing that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law. The bill would also revise the above operative language to provide that the bills provisions apply only to work that was performed on or after the date the Dynamex decision was adopted, May 1, 2018.Existing law, for the purposes of reducing and improving administrative regulations establishes an Office of Administrative Law to review adopted regulations. Existing law states findings and declarations of the Legislature relating to administrative regulations, noting, among other things, that the language of many regulations is frequently unclear and unnecessarily complex.This bill would make nonsubstantive changes to these findings and declarations.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 2750.3 of the Labor Code is amended to read:2750.3. (a) (1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations West, Inc. W. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are registered either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, reporting all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits, the benefits.(II) The number of commercial fishermen who have their claims disputed, the disputed.(III) The number of commercial fishermen who have their claims denied, and the denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits. The(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following: (I) a(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code, or (II) an Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who do does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform. For(II) For purposes of this clause clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or specific subject; (II) is subject.(ib) Is provided for in a contract that defines the scope of the work; and (III) is work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted. Nothing(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year. For(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or topic; (II) is topic.(ib) Is provided for in a contract that defines the scope of the work; (III) is work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows: (A) for(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code; (B) for Code.(B) For purposes of workers workers compensation by Section 3200 et seq.; and (C) for seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee owned employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i) (1) The addition of subdivision (a) to this section of the Labor Code by this act does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) of this section would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(3)Except as provided in paragraphs (1) and (2) of this subdivision, the provisions of this section of the Labor Code shall apply to work performed on or after January 1, 2020.(j) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.SECTION 1.Section 11340 of the Government Code is amended to read:11340.The Legislature finds and declares as follows:(a)There has been an unprecedented growth in the number of administrative regulations in recent years.(b)The language of many regulations is frequently unclear and unnecessarily complex, even when the complicated and technical nature of the subject matter is taken into account. The language is often confusing to the persons who must comply with the regulations.(c)Substantial time and public funds have been spent in adopting regulations, the necessity for which has not been established.(d)The imposition of prescriptive standards upon private persons and entities through regulations, when the establishment of performance standards could reasonably be expected to produce the same result, has placed an unnecessary burden on California citizens, and discouraged innovation, research, and development of improved means of achieving desirable social goals.(e)There exists no central office in state government with the power and duty to review regulations to ensure that they are written in a comprehensible manner, are authorized by statute, and are consistent with other law.(f)Correcting the problems that have been caused by the unprecedented growth of regulations in California requires the direct involvement of the Legislature and the executive branch of state government.(g)The complexity and lack of clarity in many regulations put small businesses, which do not have the resources to hire experts to assist them, at a distinct disadvantage.
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3- Amended IN Senate June 10, 2020 Amended IN Senate March 26, 2020 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 997Introduced by Senator BorgeasFebruary 13, 2020 An act to amend Section 2750.3 of the Labor Code, relating to employment.LEGISLATIVE COUNSEL'S DIGESTSB 997, as amended, Borgeas. Worker status: employees and independent contractors.Existing law requires a 3-part test, commonly known as the ABC test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification. Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. This test is commonly known as the ABC test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.Existing law exempts specified occupations and business relationships from the application of the ABC test described above. these provisions. Existing law, instead, law instead provides that these exempt relationships are governed by the multifactor test previously established in the case of adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. Existing law provides that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. Existing law also provides that insofar as the application of the above exemptions would relieve an employer from liability, those provisions apply retroactively to existing claims and actions to the maximum extent permitted by law. Existing law provides that, notwithstanding the above retroactivity language, other provisions of this law apply to work performed on or after January 1, 2020. This bill would delete the above language providing that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law. The bill would also revise the above operative language to provide that the bills provisions apply only to work that was performed on or after the date the Dynamex decision was adopted, May 1, 2018. the holding in Dynamex does not apply to any work performed prior to April 30, 2018.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
3+ Amended IN Senate March 26, 2020 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 997Introduced by Senator BorgeasFebruary 13, 2020 An act to amend Section 11340 of the Government Code, relating to state government. 2750.3 of the Labor Code, relating to employment.LEGISLATIVE COUNSEL'S DIGESTSB 997, as amended, Borgeas. Administrative regulations. Worker status: independent contractors.Existing law requires a 3-part test, commonly known as the ABC test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification. Existing law exempts specified occupations and business relationships from the application of the ABC test described above. Existing law, instead, provides that these exempt relationships are governed by the multifactor test previously established in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. Existing law provides that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. Existing law also provides that insofar as the application of the above exemptions would relieve an employer from liability, those provisions apply retroactively to existing claims and actions to the maximum extent permitted by law. Existing law provides that, notwithstanding the above retroactivity language, other provisions of this law apply to work performed on or after January 1, 2020. This bill would delete the above language providing that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law. The bill would also revise the above operative language to provide that the bills provisions apply only to work that was performed on or after the date the Dynamex decision was adopted, May 1, 2018.Existing law, for the purposes of reducing and improving administrative regulations establishes an Office of Administrative Law to review adopted regulations. Existing law states findings and declarations of the Legislature relating to administrative regulations, noting, among other things, that the language of many regulations is frequently unclear and unnecessarily complex.This bill would make nonsubstantive changes to these findings and declarations.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO
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5- Amended IN Senate June 10, 2020 Amended IN Senate March 26, 2020
5+ Amended IN Senate March 26, 2020
66
7-Amended IN Senate June 10, 2020
87 Amended IN Senate March 26, 2020
98
109 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION
1110
1211 Senate Bill
1312
1413 No. 997
1514
1615 Introduced by Senator BorgeasFebruary 13, 2020
1716
1817 Introduced by Senator Borgeas
1918 February 13, 2020
2019
21- An act to amend Section 2750.3 of the Labor Code, relating to employment.
20+ An act to amend Section 11340 of the Government Code, relating to state government. 2750.3 of the Labor Code, relating to employment.
2221
2322 LEGISLATIVE COUNSEL'S DIGEST
2423
2524 ## LEGISLATIVE COUNSEL'S DIGEST
2625
27-SB 997, as amended, Borgeas. Worker status: employees and independent contractors.
26+SB 997, as amended, Borgeas. Administrative regulations. Worker status: independent contractors.
2827
29-Existing law requires a 3-part test, commonly known as the ABC test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification. Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. This test is commonly known as the ABC test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.Existing law exempts specified occupations and business relationships from the application of the ABC test described above. these provisions. Existing law, instead, law instead provides that these exempt relationships are governed by the multifactor test previously established in the case of adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. Existing law provides that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. Existing law also provides that insofar as the application of the above exemptions would relieve an employer from liability, those provisions apply retroactively to existing claims and actions to the maximum extent permitted by law. Existing law provides that, notwithstanding the above retroactivity language, other provisions of this law apply to work performed on or after January 1, 2020. This bill would delete the above language providing that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law. The bill would also revise the above operative language to provide that the bills provisions apply only to work that was performed on or after the date the Dynamex decision was adopted, May 1, 2018. the holding in Dynamex does not apply to any work performed prior to April 30, 2018.
28+Existing law requires a 3-part test, commonly known as the ABC test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification. Existing law exempts specified occupations and business relationships from the application of the ABC test described above. Existing law, instead, provides that these exempt relationships are governed by the multifactor test previously established in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. Existing law provides that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. Existing law also provides that insofar as the application of the above exemptions would relieve an employer from liability, those provisions apply retroactively to existing claims and actions to the maximum extent permitted by law. Existing law provides that, notwithstanding the above retroactivity language, other provisions of this law apply to work performed on or after January 1, 2020. This bill would delete the above language providing that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law. The bill would also revise the above operative language to provide that the bills provisions apply only to work that was performed on or after the date the Dynamex decision was adopted, May 1, 2018.Existing law, for the purposes of reducing and improving administrative regulations establishes an Office of Administrative Law to review adopted regulations. Existing law states findings and declarations of the Legislature relating to administrative regulations, noting, among other things, that the language of many regulations is frequently unclear and unnecessarily complex.This bill would make nonsubstantive changes to these findings and declarations.
3029
3130 Existing law requires a 3-part test, commonly known as the ABC test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.
3231
33-
34-
35-Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. This test is commonly known as the ABC test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.
36-
37-Existing law exempts specified occupations and business relationships from the application of the ABC test described above. these provisions. Existing law, instead, law instead provides that these exempt relationships are governed by the multifactor test previously established in the case of adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
32+Existing law exempts specified occupations and business relationships from the application of the ABC test described above. Existing law, instead, provides that these exempt relationships are governed by the multifactor test previously established in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
3833
3934 Existing law provides that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. Existing law also provides that insofar as the application of the above exemptions would relieve an employer from liability, those provisions apply retroactively to existing claims and actions to the maximum extent permitted by law. Existing law provides that, notwithstanding the above retroactivity language, other provisions of this law apply to work performed on or after January 1, 2020.
4035
41-This bill would delete the above language providing that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law. The bill would also revise the above operative language to provide that the bills provisions apply only to work that was performed on or after the date the Dynamex decision was adopted, May 1, 2018. the holding in Dynamex does not apply to any work performed prior to April 30, 2018.
36+This bill would delete the above language providing that the addition of the ABC test to the Labor Code does not constitute a change in, but is declaratory of, existing law. The bill would also revise the above operative language to provide that the bills provisions apply only to work that was performed on or after the date the Dynamex decision was adopted, May 1, 2018.
37+
38+Existing law, for the purposes of reducing and improving administrative regulations establishes an Office of Administrative Law to review adopted regulations. Existing law states findings and declarations of the Legislature relating to administrative regulations, noting, among other things, that the language of many regulations is frequently unclear and unnecessarily complex.
39+
40+
41+
42+This bill would make nonsubstantive changes to these findings and declarations.
43+
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4245
4346 ## Digest Key
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4548 ## Bill Text
4649
47-The people of the State of California do enact as follows:SECTION 1. Section 2750.3 of the Labor Code is amended to read:2750.3. (a) (1) For purposes of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits.(II) The number of commercial fishermen who have their claims disputed.(III) The number of commercial fishermen who have their claims denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits.(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following:(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform.(II) For purposes of this clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that meets all of the following:(ia) Pertains to a specific event or specific subject.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted.(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year.(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that meets all of the following:(ia) Pertains to a specific event or topic.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows:(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code.(B) For purposes of workers compensation by Section 3200 et seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i)(1)The provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2)(i) (1) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(2) Except as provided in paragraph (1), this section shall only apply to work performed on or after January 1, 2020.(j) The holding in Dynamex does not apply to any work performed prior to April 30, 2018. (j)(k) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
50+The people of the State of California do enact as follows:SECTION 1. Section 2750.3 of the Labor Code is amended to read:2750.3. (a) (1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations West, Inc. W. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are registered either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, reporting all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits, the benefits.(II) The number of commercial fishermen who have their claims disputed, the disputed.(III) The number of commercial fishermen who have their claims denied, and the denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits. The(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following: (I) a(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code, or (II) an Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who do does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform. For(II) For purposes of this clause clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or specific subject; (II) is subject.(ib) Is provided for in a contract that defines the scope of the work; and (III) is work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted. Nothing(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year. For(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or topic; (II) is topic.(ib) Is provided for in a contract that defines the scope of the work; (III) is work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows: (A) for(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code; (B) for Code.(B) For purposes of workers workers compensation by Section 3200 et seq.; and (C) for seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee owned employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i) (1) The addition of subdivision (a) to this section of the Labor Code by this act does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) of this section would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(3)Except as provided in paragraphs (1) and (2) of this subdivision, the provisions of this section of the Labor Code shall apply to work performed on or after January 1, 2020.(j) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.SECTION 1.Section 11340 of the Government Code is amended to read:11340.The Legislature finds and declares as follows:(a)There has been an unprecedented growth in the number of administrative regulations in recent years.(b)The language of many regulations is frequently unclear and unnecessarily complex, even when the complicated and technical nature of the subject matter is taken into account. The language is often confusing to the persons who must comply with the regulations.(c)Substantial time and public funds have been spent in adopting regulations, the necessity for which has not been established.(d)The imposition of prescriptive standards upon private persons and entities through regulations, when the establishment of performance standards could reasonably be expected to produce the same result, has placed an unnecessary burden on California citizens, and discouraged innovation, research, and development of improved means of achieving desirable social goals.(e)There exists no central office in state government with the power and duty to review regulations to ensure that they are written in a comprehensible manner, are authorized by statute, and are consistent with other law.(f)Correcting the problems that have been caused by the unprecedented growth of regulations in California requires the direct involvement of the Legislature and the executive branch of state government.(g)The complexity and lack of clarity in many regulations put small businesses, which do not have the resources to hire experts to assist them, at a distinct disadvantage.
4851
4952 The people of the State of California do enact as follows:
5053
5154 ## The people of the State of California do enact as follows:
5255
53-SECTION 1. Section 2750.3 of the Labor Code is amended to read:2750.3. (a) (1) For purposes of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits.(II) The number of commercial fishermen who have their claims disputed.(III) The number of commercial fishermen who have their claims denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits.(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following:(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform.(II) For purposes of this clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that meets all of the following:(ia) Pertains to a specific event or specific subject.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted.(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year.(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that meets all of the following:(ia) Pertains to a specific event or topic.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows:(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code.(B) For purposes of workers compensation by Section 3200 et seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i)(1)The provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2)(i) (1) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(2) Except as provided in paragraph (1), this section shall only apply to work performed on or after January 1, 2020.(j) The holding in Dynamex does not apply to any work performed prior to April 30, 2018. (j)(k) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
56+SECTION 1. Section 2750.3 of the Labor Code is amended to read:2750.3. (a) (1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations West, Inc. W. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are registered either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, reporting all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits, the benefits.(II) The number of commercial fishermen who have their claims disputed, the disputed.(III) The number of commercial fishermen who have their claims denied, and the denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits. The(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following: (I) a(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code, or (II) an Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who do does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform. For(II) For purposes of this clause clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or specific subject; (II) is subject.(ib) Is provided for in a contract that defines the scope of the work; and (III) is work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted. Nothing(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year. For(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or topic; (II) is topic.(ib) Is provided for in a contract that defines the scope of the work; (III) is work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows: (A) for(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code; (B) for Code.(B) For purposes of workers workers compensation by Section 3200 et seq.; and (C) for seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee owned employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i) (1) The addition of subdivision (a) to this section of the Labor Code by this act does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) of this section would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(3)Except as provided in paragraphs (1) and (2) of this subdivision, the provisions of this section of the Labor Code shall apply to work performed on or after January 1, 2020.(j) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
5457
5558 SECTION 1. Section 2750.3 of the Labor Code is amended to read:
5659
5760 ### SECTION 1.
5861
59-2750.3. (a) (1) For purposes of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits.(II) The number of commercial fishermen who have their claims disputed.(III) The number of commercial fishermen who have their claims denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits.(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following:(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform.(II) For purposes of this clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that meets all of the following:(ia) Pertains to a specific event or specific subject.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted.(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year.(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that meets all of the following:(ia) Pertains to a specific event or topic.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows:(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code.(B) For purposes of workers compensation by Section 3200 et seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i)(1)The provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2)(i) (1) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(2) Except as provided in paragraph (1), this section shall only apply to work performed on or after January 1, 2020.(j) The holding in Dynamex does not apply to any work performed prior to April 30, 2018. (j)(k) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
62+2750.3. (a) (1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations West, Inc. W. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are registered either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, reporting all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits, the benefits.(II) The number of commercial fishermen who have their claims disputed, the disputed.(III) The number of commercial fishermen who have their claims denied, and the denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits. The(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following: (I) a(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code, or (II) an Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who do does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform. For(II) For purposes of this clause clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or specific subject; (II) is subject.(ib) Is provided for in a contract that defines the scope of the work; and (III) is work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted. Nothing(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year. For(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or topic; (II) is topic.(ib) Is provided for in a contract that defines the scope of the work; (III) is work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows: (A) for(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code; (B) for Code.(B) For purposes of workers workers compensation by Section 3200 et seq.; and (C) for seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee owned employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i) (1) The addition of subdivision (a) to this section of the Labor Code by this act does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) of this section would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(3)Except as provided in paragraphs (1) and (2) of this subdivision, the provisions of this section of the Labor Code shall apply to work performed on or after January 1, 2020.(j) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
6063
61-2750.3. (a) (1) For purposes of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits.(II) The number of commercial fishermen who have their claims disputed.(III) The number of commercial fishermen who have their claims denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits.(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following:(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform.(II) For purposes of this clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that meets all of the following:(ia) Pertains to a specific event or specific subject.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted.(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year.(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that meets all of the following:(ia) Pertains to a specific event or topic.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows:(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code.(B) For purposes of workers compensation by Section 3200 et seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i)(1)The provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2)(i) (1) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(2) Except as provided in paragraph (1), this section shall only apply to work performed on or after January 1, 2020.(j) The holding in Dynamex does not apply to any work performed prior to April 30, 2018. (j)(k) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
64+2750.3. (a) (1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations West, Inc. W. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are registered either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, reporting all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits, the benefits.(II) The number of commercial fishermen who have their claims disputed, the disputed.(III) The number of commercial fishermen who have their claims denied, and the denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits. The(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following: (I) a(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code, or (II) an Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who do does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform. For(II) For purposes of this clause clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or specific subject; (II) is subject.(ib) Is provided for in a contract that defines the scope of the work; and (III) is work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted. Nothing(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year. For(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or topic; (II) is topic.(ib) Is provided for in a contract that defines the scope of the work; (III) is work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows: (A) for(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code; (B) for Code.(B) For purposes of workers workers compensation by Section 3200 et seq.; and (C) for seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee owned employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i) (1) The addition of subdivision (a) to this section of the Labor Code by this act does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) of this section would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(3)Except as provided in paragraphs (1) and (2) of this subdivision, the provisions of this section of the Labor Code shall apply to work performed on or after January 1, 2020.(j) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
6265
63-2750.3. (a) (1) For purposes of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits.(II) The number of commercial fishermen who have their claims disputed.(III) The number of commercial fishermen who have their claims denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits.(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following:(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform.(II) For purposes of this clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that meets all of the following:(ia) Pertains to a specific event or specific subject.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted.(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year.(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that meets all of the following:(ia) Pertains to a specific event or topic.(ib) Is provided for in a contract that defines the scope of the work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows:(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code.(B) For purposes of workers compensation by Section 3200 et seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i)(1)The provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2)(i) (1) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(2) Except as provided in paragraph (1), this section shall only apply to work performed on or after January 1, 2020.(j) The holding in Dynamex does not apply to any work performed prior to April 30, 2018. (j)(k) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
66+2750.3. (a) (1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that 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 entitys 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.(2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).(b) Subdivision (a) and the holding in Dynamex Operations West, Inc. W. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.(4) A securities broker-dealer or investment adviser or their agents and representatives that are registered either of the following:(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed Authority.(B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.(A) For the purposes of this paragraph:(i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.(ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.(iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.(B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, reporting all of the following:(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits, the benefits.(II) The number of commercial fishermen who have their claims disputed, the disputed.(III) The number of commercial fishermen who have their claims denied, and the denied.(IV) The number of commercial fishermen who receive unemployment insurance benefits. The(ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.(D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.(7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.(A) For purposes of this paragraph:(i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.(ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.(iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.(iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.(B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature. (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:(A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.(C) The individual has the ability to set or negotiate their own rates for the services performed.(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.(2) For purposes of this subdivision:(A) An individual includes an individual providing services through a sole proprietorship or other business entity.(B) Professional services means services that meet any of the following:(i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.(ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.(iii) Travel agent services provided by either of the following: (I) a(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code, or (II) an Code.(II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.(iv) Graphic design.(v) Grant writer.(vi) Fine artist.(vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.(viii) Payment processing agent through an independent sales organization.(ix) (I) Services provided by a still photographer or photojournalist who do does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform. For(II) For purposes of this clause clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or specific subject; (II) is subject.(ib) Is provided for in a contract that defines the scope of the work; and (III) is work.(ic) Is accepted by and licensed to the publication or stock photography company and published or posted. Nothing(III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year. For(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that: (I) pertains that meets all of the following:(ia) Pertains to a specific event or topic; (II) is topic.(ib) Is provided for in a contract that defines the scope of the work; (III) is work.(ic) Is accepted by the publication or company and published or posted for sale.(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:(I) Sets their own rates, processes their own payments, and is paid directly by clients.(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.(III) Has their own book of business and schedules their own appointments.(IV) Maintains their own business license for the services offered to clients.(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.(d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows: (A) for(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code; (B) for Code.(B) For purposes of workers workers compensation by Section 3200 et seq.; and (C) for seq.(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.(2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:(1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.(C) The contract with the business service provider is in writing.(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.(J) The business service provider can negotiate its own rates.(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.(L) The business service provider is not performing the type of work for which a license from the Contractors Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.(2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.(3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).(4) This subdivision does not alter or supersede any existing rights under Section 2810.3.(f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:(1) The subcontract is in writing.(2) The subcontractor is licensed by the Contractors Contractors State License Board and the work is within the scope of that license.(3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.(4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.(5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.(6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.(7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.(8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:(i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.(ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.(iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.(iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.(B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.(C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.(D) This paragraph shall only apply to work performed before January 1, 2022.(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee owned employee-owned truck.(g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:(1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:(A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.(B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.(C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.(D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.(E) The service provider provides its own tools and supplies to perform the services.(F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.(G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.(H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.(I) The service provider sets its own rates for services performed, without deduction by the referral agency.(J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.(2) For purposes of this subdivision, the following definitions apply:(A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.(B) Client means a person or business that engages a service contractor through a referral agency.(C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.(D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).(E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.(F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.(3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).(h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.(i) (1) The addition of subdivision (a) to this section of the Labor Code by this act does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.(2) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) of this section would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.(3)Except as provided in paragraphs (1) and (2) of this subdivision, the provisions of this section of the Labor Code shall apply to work performed on or after January 1, 2020.(j) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
6467
6568
6669
67-2750.3. (a) (1) For purposes of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:
70+2750.3. (a) (1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:
6871
6972 (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.
7073
7174 (B) The person performs work that is outside the usual course of the hiring entitys business.
7275
7376 (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.
7477
7578 (2) Notwithstanding paragraph (1), any exceptions to the terms employee, employer, employ, or independent contractor, and any extensions of employer status or liability, that are expressly made by a provision of this code, the Unemployment Insurance Code, or in an applicable order of the Industrial Welfare Commission, including, but not limited to, the definition of employee in subdivision 2(E) of Wage Order No. 2, shall remain in effect for the purposes set forth therein.
7679
7780 (3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Courts decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).
7881
79-(b) Subdivision (a) and the holding in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.
82+(b) Subdivision (a) and the holding in Dynamex Operations West, Inc. W. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), (Dynamex) do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.
8083
8184 (1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8 (commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.
8285
8386 (2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section 13401 of the Corporations Code. Nothing in this subdivision shall apply to the employment settings currently or potentially governed by collective bargaining agreements for the licensees identified in this paragraph.
8487
8588 (3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.
8689
87-(4) A securities broker-dealer or investment adviser or their agents and representatives that are either of the following:
90+(4) A securities broker-dealer or investment adviser or their agents and representatives that are registered either of the following:
8891
89-(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority.
92+(A) Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed Authority.
9093
9194 (B) Licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.
9295
9396 (5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.
9497
9598 (6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.
9699
97100 (A) For the purposes of this paragraph:
98101
99102 (i) American vessel has the same meaning as defined in Section 125.5 of the Unemployment Insurance Code.
100103
101104 (ii) Commercial fisherman means a person who has a valid, unrevoked commercial fishing license issued pursuant to Article 3 (commencing with Section 7850) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code.
102105
103106 (iii) Working on an American vessel means the taking or the attempt to take fish, shellfish, or other fishery resources of the state by any means, and includes each individual aboard an American vessel operated for fishing purposes who participates directly or indirectly in the taking of these raw fishery products, including maintaining the vessel or equipment used aboard the vessel. However, working on an American vessel does not apply to anyone aboard a licensed commercial fishing vessel as a visitor or guest who does not directly or indirectly participate in the taking.
104107
105108 (B) For the purposes of this paragraph, a commercial fisherman working on an American vessel is eligible for unemployment insurance benefits if they meet the definition of employment in Section 609 of the Unemployment Insurance Code and are otherwise eligible for those benefits pursuant to the provisions of the Unemployment Insurance Code.
106109
107-(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, all of the following:
110+(C) (i) On or before March 1, 2021, and each March 1 thereafter, the Employment Development Department shall issue an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry. This report shall include, but not be limited to, reporting all of the following:
108111
109-(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits.
112+(I) Reporting the number of commercial fishermen who apply for unemployment insurance benefits, the benefits.
110113
111-(II) The number of commercial fishermen who have their claims disputed.
114+(II) The number of commercial fishermen who have their claims disputed, the disputed.
112115
113-(III) The number of commercial fishermen who have their claims denied.
116+(III) The number of commercial fishermen who have their claims denied, and the denied.
114117
115-(IV) The number of commercial fishermen who receive unemployment insurance benefits.
118+(IV) The number of commercial fishermen who receive unemployment insurance benefits. The
116119
117120 (ii) The report required by this subparagraph shall be submitted in compliance with Section 9795 of the Government Code.
118121
119122 (D) This paragraph shall become inoperative on January 1, 2023, unless extended by the Legislature.
120123
121124 (7) A newspaper distributor working under contract with a newspaper publisher, as defined in subparagraph (A), and a newspaper carrier working under contract either with a newspaper publisher or newspaper distributor.
122125
123126 (A) For purposes of this paragraph:
124127
125128 (i) Newspaper means a newspaper of general circulation, as defined in Section 6000 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspapers own publication, whether that publication be designated a shoppers guide, as a zoned edition, or otherwise.
126129
127130 (ii) Publisher means the natural or corporate person that manages the newspapers business operations, including circulation.
128131
129132 (iii) Newspaper distributor means a person or entity that contracts with a publisher to distribute newspapers to the community.
130133
131134 (iv) Carrier means a person who effects physical delivery of the newspaper to the customer or reader.
132135
133136 (B) This paragraph shall become inoperative on January 1, 2021, unless extended by the Legislature.
134137
135138 (c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for professional services as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:
136139
137140 (A) The individual maintains a business location, which may include the individuals residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.
138141
139142 (B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.
140143
141144 (C) The individual has the ability to set or negotiate their own rates for the services performed.
142145
143146 (D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individuals own hours.
144147
145148 (E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.
146149
147150 (F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.
148151
149152 (2) For purposes of this subdivision:
150153
151154 (A) An individual includes an individual providing services through a sole proprietorship or other business entity.
152155
153156 (B) Professional services means services that meet any of the following:
154157
155158 (i) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the contracted work.
156159
157160 (ii) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.
158161
159-(iii) Travel agent services provided by either of the following:
162+(iii) Travel agent services provided by either of the following: (I) a
160163
161-(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.
164+(I) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code, or (II) an Code.
162165
163166 (II) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.
164167
165168 (iv) Graphic design.
166169
167170 (v) Grant writer.
168171
169172 (vi) Fine artist.
170173
171174 (vii) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.
172175
173176 (viii) Payment processing agent through an independent sales organization.
174177
175-(ix) (I) Services provided by a still photographer or photojournalist who does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform.
178+(ix) (I) Services provided by a still photographer or photojournalist who do does not license content submissions to the putative employer more than 35 times per year. This clause is not applicable to an individual who works on motion pictures, which includes, but is not limited to, projects produced for theatrical, television, internet streaming for any device, commercial productions, broadcast news, music videos, and live shows, whether distributed live or recorded for later broadcast, regardless of the distribution platform. For
176179
177-(II) For purposes of this clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that meets all of the following:
180+(II) For purposes of this clause clause, a submission is one or more items or forms of content produced by a still photographer or photojournalist that: (I) pertains that meets all of the following:
178181
179-(ia) Pertains to a specific event or specific subject.
182+(ia) Pertains to a specific event or specific subject; (II) is subject.
180183
181-(ib) Is provided for in a contract that defines the scope of the work.
184+(ib) Is provided for in a contract that defines the scope of the work; and (III) is work.
182185
183-(ic) Is accepted by and licensed to the publication or stock photography company and published or posted.
186+(ic) Is accepted by and licensed to the publication or stock photography company and published or posted. Nothing
184187
185188 (III) Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.
186189
187-(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year.
190+(x) (I) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year. For
188191
189-(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that meets all of the following:
192+(II) For purposes of this clause, a submission is one or more items or forms of content by a freelance journalist that: (I) pertains that meets all of the following:
190193
191-(ia) Pertains to a specific event or topic.
194+(ia) Pertains to a specific event or topic; (II) is topic.
192195
193-(ib) Is provided for in a contract that defines the scope of the work.
196+(ib) Is provided for in a contract that defines the scope of the work; (III) is work.
194197
195198 (ic) Is accepted by the publication or company and published or posted for sale.
196199
197200 (xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:
198201
199202 (I) Sets their own rates, processes their own payments, and is paid directly by clients.
200203
201204 (II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.
202205
203206 (III) Has their own book of business and schedules their own appointments.
204207
205208 (IV) Maintains their own business license for the services offered to clients.
206209
207210 (V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.
208211
209212 (VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.
210213
211214 (d) Subdivision (a) and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:
212215
213-(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows:
216+(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows: (A) for
214217
215-(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code.
218+(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code; (B) for Code.
216219
217-(B) For purposes of workers compensation by Section 3200 et seq.
220+(B) For purposes of workers workers compensation by Section 3200 et seq.; and (C) for seq.
218221
219222 (C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.
220223
221224 (2) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
222225
223226 (e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:
224227
225228 (1) If 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 (contracting business), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:
226229
227230 (A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
228231
229232 (B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.
230233
231234 (C) The contract with the business service provider is in writing.
232235
233236 (D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.
234237
235238 (E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.
236239
237240 (F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.
238241
239242 (G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.
240243
241244 (H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.
242245
243246 (I) The business service provider provides its own tools, vehicles, and equipment to perform the services.
244247
245248 (J) The business service provider can negotiate its own rates.
246249
247250 (K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.
248251
249-(L) The business service provider is not performing the type of work for which a license from the Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.
252+(L) The business service provider is not performing the type of work for which a license from the Contractors Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.
250253
251254 (2) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs labor or services for a contracting business.
252255
253256 (3) The determination of whether an individual working for a business service provider is an employee or independent contractor of the business service provider is governed by paragraph (1) of subdivision (a).
254257
255258 (4) This subdivision does not alter or supersede any existing rights under Section 2810.3.
256259
257260 (f) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and by Borello, if the contractor demonstrates that all the following criteria are satisfied:
258261
259262 (1) The subcontract is in writing.
260263
261-(2) The subcontractor is licensed by the Contractors State License Board and the work is within the scope of that license.
264+(2) The subcontractor is licensed by the Contractors Contractors State License Board and the work is within the scope of that license.
262265
263266 (3) If the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor has the required business license or business tax registration.
264267
265268 (4) The subcontractor maintains a business location that is separate from the business or work location of the contractor.
266269
267270 (5) The subcontractor has the authority to hire and to fire other persons to provide or to assist in providing the services.
268271
269272 (6) The subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided.
270273
271274 (7) The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.
272275
273276 (8) (A) Paragraph (2) shall not apply to a subcontractor providing construction trucking services for which a contractors license is not required by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, provided that all of the following criteria are satisfied:
274277
275278 (i) The subcontractor is a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.
276279
277280 (ii) For work performed after January 1, 2020, the subcontractor is registered with the Department of Industrial Relations as a public works contractor pursuant to Section 1725.5, regardless of whether the subcontract involves public work.
278281
279282 (iii) The subcontractor utilizes its own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles.
280283
281284 (iv) The subcontractor negotiates and contracts with, and is compensated directly by, the licensed contractor.
282285
283286 (B) For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks.
284287
285288 (C) For purposes of this paragraph, construction trucking services mean hauling and trucking services provided in the construction industry pursuant to a contract with a licensed contractor utilizing vehicles that require a commercial drivers license to operate or have a gross vehicle weight rating of 26,001 or more pounds.
286289
287290 (D) This paragraph shall only apply to work performed before January 1, 2022.
288291
289-(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee-owned truck.
292+(E) Nothing in this paragraph prohibits an individual who owns their truck from working as an employee of a trucking company and utilizing that truck in the scope of that employment. An individual employee providing their own truck for use by an employer trucking company shall be reimbursed by the trucking company for the reasonable expense incurred for the use of the employee owned employee-owned truck.
290293
291294 (g) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a referral agency and a service provider, as defined below, under the following conditions:
292295
293296 (1) If a business entity formed as a sole proprietor, partnership, limited liability company, limited liability partnership, or corporation (service provider) provides services to clients through a referral agency, the determination of whether the service provider is an employee of the referral agency shall be governed by Borello, if the referral agency demonstrates that all of the following criteria are satisfied:
294297
295298 (A) The service provider is free from the control and direction of the referral agency in connection with the performance of the work for the client, both as a matter of contract and in fact.
296299
297300 (B) If the work for the client is performed in a jurisdiction that requires the service provider to have a business license or business tax registration, the service provider has the required business license or business tax registration.
298301
299302 (C) If the work for the client requires the service provider to hold a state contractors license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, the service provider has the required contractors license.
300303
301304 (D) The service provider delivers services to the client under the service providers name, rather than under the name of the referral agency.
302305
303306 (E) The service provider provides its own tools and supplies to perform the services.
304307
305308 (F) The service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed for the client.
306309
307310 (G) The service provider maintains a clientele without any restrictions from the referral agency and the service provider is free to seek work elsewhere, including through a competing agency.
308311
309312 (H) The service provider sets its own hours and terms of work and is free to accept or reject clients and contracts.
310313
311314 (I) The service provider sets its own rates for services performed, without deduction by the referral agency.
312315
313316 (J) The service provider is not penalized in any form for rejecting clients or contracts. This subparagraph does not apply if the service provider accepts a client or contract and then fails to fulfill any of its contractual obligations.
314317
315318 (2) For purposes of this subdivision, the following definitions apply:
316319
317320 (A) Animal services means services related to daytime and nighttime pet care including pet boarding under Section 122380 of the Health and Safety Code.
318321
319322 (B) Client means a person or business that engages a service contractor through a referral agency.
320323
321324 (C) Referral agency is a business that connects clients with service providers that provide graphic design, photography, tutoring, event planning, minor home repair, moving, home cleaning, errands, furniture assembly, animal services, dog walking, dog grooming, web design, picture hanging, pool cleaning, or yard cleanup.
322325
323326 (D) Referral agency contract is the agencys contract with clients and service contractors governing the use of its intermediary services described in subparagraph (C).
324327
325328 (E) Service provider means a person or business who agrees to the referral agencys contract and uses the referral agency to connect with clients.
326329
327330 (F) Tutor means a person who develops and teaches their own curriculum. A tutor does not include a person who teaches a curriculum created by a public school or who contracts with a public school through a referral company for purposes of teaching students of a public school.
328331
329332 (3) This subdivision does not apply to an individual worker, as opposed to a business entity, who performs services for a client through a referral agency. The determination of whether such an individual is an employee of a referral agency is governed by subdivision (a).
330333
331334 (h) Subdivision (a) and the holding in Dynamex do not apply to the relationship between a motor club holding a certificate of authority issued pursuant to Chapter 2 (commencing with Section 12160) of Part 5 of Division 2 of the Insurance Code and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party and, instead, the determination of whether such an individual is an employee of the motor club shall be governed by Borello, if the motor club demonstrates that the third party is a separate and independent business from the motor club.
332335
333-(i)(1)The provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.
336+(i) (1) The addition of subdivision (a) to this section of the Labor Code by this act does not constitute a change in, but is declaratory of, existing law with regard to wage orders of the Industrial Welfare Commission and violations of the Labor Code relating to wage orders. provisions of this section shall apply only to work that was performed on or after the Dynamex decision was adopted on May 1, 2018.
337+
338+(2) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) of this section would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.
339+
340+(3)Except as provided in paragraphs (1) and (2) of this subdivision, the provisions of this section of the Labor Code shall apply to work performed on or after January 1, 2020.
334341
335342
336343
337-(2)
344+(j) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
338345
339346
340347
341-(i) (1) Insofar as the application of subdivisions (b), (c), (d), (e), (f), (g), and (h) would relieve an employer from liability, those subdivisions shall apply retroactively to existing claims and actions to the maximum extent permitted by law.
342348
343-(2) Except as provided in paragraph (1), this section shall only apply to work performed on or after January 1, 2020.
344349
345-(j) The holding in Dynamex does not apply to any work performed prior to April 30, 2018.
346-
347-(j)
350+The Legislature finds and declares as follows:
348351
349352
350353
351-(k) In addition to any other remedies available, an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association.
354+(a)There has been an unprecedented growth in the number of administrative regulations in recent years.
355+
356+
357+
358+(b)The language of many regulations is frequently unclear and unnecessarily complex, even when the complicated and technical nature of the subject matter is taken into account. The language is often confusing to the persons who must comply with the regulations.
359+
360+
361+
362+(c)Substantial time and public funds have been spent in adopting regulations, the necessity for which has not been established.
363+
364+
365+
366+(d)The imposition of prescriptive standards upon private persons and entities through regulations, when the establishment of performance standards could reasonably be expected to produce the same result, has placed an unnecessary burden on California citizens, and discouraged innovation, research, and development of improved means of achieving desirable social goals.
367+
368+
369+
370+(e)There exists no central office in state government with the power and duty to review regulations to ensure that they are written in a comprehensible manner, are authorized by statute, and are consistent with other law.
371+
372+
373+
374+(f)Correcting the problems that have been caused by the unprecedented growth of regulations in California requires the direct involvement of the Legislature and the executive branch of state government.
375+
376+
377+
378+(g)The complexity and lack of clarity in many regulations put small businesses, which do not have the resources to hire experts to assist them, at a distinct disadvantage.