Worker classification is how you determine whether a worker is an employee or an independent...
As of Sept. 30, 2021, California introduced the ABC testing exemptions to its law aimed at regulating the classification of independent contractors through AB 5. AB 5 needs a test that is divided into three subsections. This test is also commonly referred to as the ABC test. The test plays a role in helping determine if the labor force is made up of independent contractors or employees.
When an organization qualifies for exemption from an ABC test, employers must reverse and move towards old multifactor determination methods for worker classification. All exceptions for the adaptations were meant to commence from Jan. 1, 2022.
Adapted Exemptions
- Data collectors—There are specific areas of eligibility that apply. The legal amendment reverts the exceptions to the connection between a research subject and a data aggregator. In essence, this adapted legal bill removes the qualification criteria that an amount paid in the form of consideration for any form of the feedback given, if set on an hourly basis, is more than or equal to the minimum wage.
- Salespeople for Manufactured houses—The legal bill amendment gives various sales forces an advantage. It clearly states that the factors mentioned under the multifactor test do not consider statutorily imposed responsibilities of a housing agent. Therefore, employers who manage the ABC testing approach should take note of the exemption of salespersons.
- Services related to Insurance— The updated legal bill enhances the exception to individuals who offer claims adjusting or administration for third parties. All in all, insurance-related services are readily in the cards and aid in getting exempted from ABC testing.
- Services for Construction trucking—There are specific areas of eligibility that apply. All exemptions are focused on work performed before Jan. 1, 2022. On the other hand, the update prolongs the opportunity of exemption on work performance to Jan. 1, 2025.
- Manicurists with licenses— The announced exemption ended by Jan. 1, 2022. However, the update prolongs the exemption till Jan. 1, 2025.
ABC's Testing Exemptions Effect on Employers
Since this legal bill directly impacts employers of all organizations, it is integral for them to educate themselves on ABC testing thoroughly. Moreover, as this form of testing goes through various updates and amendments, employers should remain up to date with all exemptions involved as time progresses.
All legalities depend on the test results. However, employers must cater to all exemptions to ensure that all requirements are fulfilled and that independent contractors or employees can enjoy the perks of working independently without having to pass or fail the ABC test. To ensure this, employers must be well-versed with all adaptations or amendments up to 2022.
Do you know your ABCs? Let us give you a hand in making your business thrive. Reach out to a TPG Payroll & HR specialist today! Call 909.466.7876 to get the help you deserve!
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