New California Laws Extend AB 5 Exemptions for Certain Industries

Gov. Gavin Newsom has signed AB 1561 to extend the sunset dates on the exemptions granted to licensed manicurists and construction trucking subcontractors from the provisions of AB 5. AB 5 sets forth the test for whether a worker is an independent contractor or employee.

The exemptions will now sunset on Jan. 1, 2025, providing each industry three additional years to determine compliance with AB 5.

AB 1561 also clarifies the scope of the exemption granted to a data aggregator and a research subject who willingly engages with a data aggregator to provide individualized feedback.

The new legislation further clarifies that the exemption for the insurance industry extends to an individual providing claims adjusting or third-party administration work. Finally, as to the existing exemption for manufactured housing salespersons, AB 1561 specifies that the statutorily imposed duties of a manufactured housing dealer under the Health and Safety Code are not factors to be considered under the worker classification test.

Exemption Extended for Newspaper Distributors and Carriers

The governor also has signed AB 1506, which extends the existing exemption for three more years for newspaper distributors and carriers from the “ABC Test” under Dynamex and AB 5.

The bill takes into account the reality that newspaper carriers often work for more than one newspaper and requiring carriers to be classified as employees would limit carriers’ opportunities and drive up the cost of newspaper deliveries.

The bill also requires newspaper distributors to submit specified information to the Labor and Workforce Development Agency on the number of carriers for which the publisher or distributor paid and did not pay payroll taxes for, as well as the wage rates and information to demonstrate compliance of their carrier with the Borello test, which is a multi-factor test for determining worker classification.

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