People2.0 Blog

The more we can understand the law, the better off we’ll be. As you recall, under the AB5 law, independent contractors, or ICs, must meet all three strict ABC criteria to truly qualify as independent contractors rather than employees. In this article we’ll take a closer look at the exceptions or carve-outs to the law. First, a few qualifiers. Out of the thousands of jobs in the cradle of innovation that is the very large state of California, only a few dozen industries are carved out of the AB5 legislation, and the jobs that are carved out specifically can seem arbitrary. For example, fine artists are carved out, but musicians aren’t. Psychologists get an exception, but psychiatrists are not specifically named as being outside of AB5’s ABC Test.Plus, we must keep in mind that these carved out professions are not truly exempt from all IC requirements. They are simply exempt from the ABC Test, which means that contractors must still be qualified under the previous multi-factor Borello Test.

When you begin to examine the business tax implications of California’s AB5 law, it’s easy to make things complicated. We’d like to simplify them.