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Who is exempt from the ABC test in California?

On Behalf of | Oct 23, 2023 | Employee Classification

California’s employment laws seek to balance the relationship between employers and employees while protecting workers’ rights. One such law is Assembly Bill 5, which implemented the ABC test that determines whether a worker is legally an employee or an independent contractor.

However, not everyone is subject to this test. Thus, the state’s Wage Orders do not cover certain professions due to their unique nature.

Various licensed professionals

The ABC test does not apply to certain careers that require licensure, for example, medical professionals. Doctors, dentists, nurses and pharmacists have their own licensing and educational requirements that exempt them. Other jobs that require a professional license also fit in this category. Lawyers, architects, engineers and accountants fall into this group.

Also, real estate agents do work that involves a degree of autonomy and specialized knowledge in the housing market. Their exemption from the ABC test recognizes that their job differs significantly from typical employment relationships. Likewise, insurance brokers may operate as independent contractors, exempting them from the ABC test.

Hair stylists and barbers might be exempt, depending on their relationship with the shops they work in. Generally, the nature of their work makes them independent contractors, as does the control they have over their schedules and clients. However, this would not be the case where a shop dictates the stylist’s schedule or owns the relationship with clients.

Performing artists in the entertainment industry

The unique nature of the entertainment industry means that specific workers would not be subject to the ABC test, including:

  • Songwriters and composers
  • Lyricists and proofers
  • Producers and directors
  • Engineers and mixers
  • Recording artists and vocalists
  • Managers and promoters

These exemptions particularly take into account one-time performances.

Business-to-business contractors

The ABC test does not apply to contracts between two businesses. When one company hires another to provide services, the relationship is that of a provider and client, not of an employer and employee.

The ABC test in California is a useful starting point in determining a worker’s classification. Those entering a contract to render services should carefully review the details and their situation to understand if an exemption applies.

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