Under AB5, an independent contractor is presumed to be an employee, unless the hiring party can show the independent contractor is:
(A) Free from control and direction of the hiring entity in connection with performance of the work
(B) The person performs work that is outside the usual course of the hiring entity’s 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.”
lf the independent contractor fails any of the three prongs, then the independent contractor will be deemed an employee.
Please take note:
Contractors should be aware that if they are not in strict compliance with AB5, and pay employees as independent contractors, they face significant potential liability, including but not limited to:
• unemployment insurance
• workers’ compensation coverage, claims and premiums
• attorneys’ fees.
What should you do as a result of AB5?
At a minimum, suggestion would be to have a written contract with all Independent contractors and those contracts should be reviewed by your attorney or an expert in the field of contracts