Signed by Governor Gavin Newsom

Vote Smart's Synopsis:

Vote to pass a bill that establishes criteria for determining who is an employee.

Highlights:

• Defines “professional services” as services that meet any of the following (Sec. 2):

• 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;

• 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;

• Travel agent services provided by either a person regulated by the Attorney General or an individual who is a seller of travel within the meaning of the Business and Professions Code;

• Graphic design;

• Grant writer;

• Fine artist;

• Services provided by an enrolled agent who is licensed by the US Department of the Treasury to practice before the Internal Revenue Service;

• Payment processing agent through an independent sales organization;

• Services provided by a still photographer or photojournalist who does not license content submissions to the putative employer more than 35 times per year;

• 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; and

• Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist, under specific conditions.

• Specifies that “professional services” does not include professionals engaged in the fields of healthcare and medicine (Sec. 2). 

• Defines “individual” as an individual providing services through a sole proprietorship or other business entity (Sec. 2).

• Specifies that the holding in Dynamex Operations West, Inc. v. Superior Court does not apply to a contract for professional services and instead the determination of whether the individual is an employee or independent contractor will be governed by the Supreme Court’s decision in the case of S.G. Borello & Sons, Inc. v. Department of Industrial relations, if the hiring entity demonstrates that all of the following factors are satisfied (Sec. 2): 

• The individual maintains a business location, which may include the individual’s residence, that is separate from the hiring entity;

• If work is performed more than six months after this bill becomes effective, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession;

• The individual has the ability to set or negotiate their own rates for the services performed;

• Outside of project completion dates and reasonable business hours, the individual has the ability to set their own hours;

• 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; and

• The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.

• Defines “employee” as every person in the service of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed (Sec. 3).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that establishes criteria for determining who is an employee.

Highlights:

• Authorizes a worker providing hairstyles or barbering services who has a booth rental and is free from director or control both under the contract for the performance of the work and in fact (Sec. 2). 

• Defines “free from direction or control” includes but is not limited to the following criteria (Sec. 2):

• Sets their own rates for services performed;

• Sets their own hours of work; and

• Has their own book of business or clients.

• Specifies that the holding in Dynamex Operations West, Inc. v. Superior Court does not apply to a contract for professional service and instead the employment relationship will be governed by the test adopted by the California Supreme Court in the case of S.G. Borello & Sons, Inc. v. Department of Industrial relations, if the hiring entity demonstrates that all of the following factors are satisfied (Sec. 2): 

• The individual maintains a business location, which may include the individual’s residence, that is separate from the hiring entity;

• If work is performed more than 6 months after this bill becomes effective, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession;

• The individual has the ability to use their own employees in the completion of the work, and has the authority to hire and fire other persons who assist in providing the service;

• The individual has the ability to engage in other contracts for services than with the hiring entity;

• Both the individual and the hiring entity have the ability to negotiate compensation for the services performed.;

• Outside of project completion dates and reasonable business hours, the individual has the ability to set their own hours;

• For services that do not reasonably have to be performed at a specific location, the individual can determine where to perform the services under the contract;

• The individual is customarily engaged in the same type of work performed under the contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work; and

• The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.

• Defines “individual” as an individual providing services through a sole proprietorship or other business entity (Sec. 2).

• Defines “professional services” as either of the following (Sec. 2):

• Requires an active license from the State of California and involves the practice of one of the following recognized professions: law, dentistry, architecture, engineering, or accounting; or

• Requires possession of an advanced degree that customarily involves a prolonged course of specialized intellectual instruction and study in the field of marketing or the administration of human resources from an accredited university, college, or professional school.

• Specifies that “professional services” does not include professionals engaged in the fields of healthcare and medicine (Sec. 2).

Full Bill Text