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Isbell Arts Blog - Life As A Freelance Artist
(An Independent Contractor)

Is California AB5 Even Constitutional?

2/26/2020

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Open letter to the committee to repeal AB5.
​Please repeal AB 5. It is wrong on so many levels. I was talking to a friend, a fellow artist about how to stay in business now that the new law governing who can work as a sole proprietor or who can not recently was signed. We recently found out that the business model we have been operating under for decades has now been changed and now we are illegals. Due to one sentence in the new law, the "B" in the ABC test, thousands of small businesses and independent contractors are now breaking the law if they continue hiring service providers for a once in awhile "Gig". The new law AB5 says if I need help on a project and my helper happens to be in the same profession as I am, that is breaking the law. That is failing the "B" part of the new law. If I want to have help on a project the only way is to hire that occasional sole proprietor as my employee. It doesn't matter if they want to be their own boss, be an independent contractor, that freedom is now gone in CA under this new law. 
Obviously this rule is impractical. But is it even constitutional? Since the new law does not work, certain professions were given a pass, a "get out of jail free card". Those professions are able to not adhere to the ABC test and they can hire an independent contractor for occasional  work and they are not illegal. They have been given an exemption. How do some people get an exemption and others not? This is wrong. This is tyranny. This goes against "life, liberty and the pursuit of happiness"  at the most basic level. This is morally wrong and damaging to thousands of previously law abiding businesses, the smallest of the small. There are many exemptions and the way the law is worded is confusing. So my friend was confused as to whether her being exempt as a fine artist was really true or not. So she went straight to the horses mouth, the local worker at the EDD, the Employment Development Department, the department who is in charge of enforcing the newly created crimes. Her answer to her simple question, Am I exempt? "I have no idea".
AB-5 exempts the following industries:
  • Doctors, surgeons, dentists, podiatrists, psychologists, or veterinarians performing professional or medical services provided to or by a health care entity;
  • Lawyers, insurance brokers, architects, engineers, private investigators, or accountants;
  • Securities brokers/dealers or investment advisers and their agents and representatives that are registered with the Securities and Exchange Commission, the Financial Industry Regulatory Authority or the State of California;
  • Real estate agents, repossession agencies, direct-sales persons, commercial fishermen;
  • Individuals performing services under a contract with a licensed “motor club.
Professional Services Exemptions that 
shall become inoperative on January 1, 2023, unless extended by the Legislature.

AB-5 provides carve-outs for the following “professional services:” (1) marketing professional; (2) human resources professional; (3) travel agent; (4) graphic designer; (5) graphic artist; (6) fine artist; (7) freelance writer; (8) barber or cosmetologist; (9) esthetician; (10) electrologist; (11) manicurist; (12) payment processing agent; and (13) IRS licensed tax professional.
To qualify the professional service provider must:
  • Have an established business location (may be home);
  • Have any required business license or occupational license;
  • Have the ability to negotiate rates;
  • Maintain the ability to set hours outside of project completion dates;
  • Engage in the same type of contract work with other companies, or must hold themselves out to other potential customers; and
  • Exercise discretion and independent judgement in their work.
NOTE: There are additional restrictions. For instance, cosmetologists must set their own hours, set their own rates, select their clients, schedule their own appointments, process their own payments, be paid directly by their clients and keep their own book of business.
Referral Agency Exemption
AB-5 provides an exemption for businesses referring customers to providers for the following services: (1) graphic design; (2) photography; (3) tutoring; (4) event planning; (5) moving; (6) minor home repairs; (7) home cleaning; (8) errands; (9) furniture assembly; (10) animal services (11) dog walking; (12) dog grooming; (13) web design; (14) picture hanging; (15) pool cleaning; or (16) yard cleanup. If the service in question is not on this list then it does not qualify for this carve-out.
To qualify the referring agency must:
  • Be an established business entity and must customarily perform work of this nature;
  • Be “free from control and direction of the referral agency;”
  • Not be penalized for rejecting clients and contracts;
  • Be free to work with other companies and to maintain their own clientele without any restrictions from the referral agency;
  • Provide their services under their name, rather than the name of the referral agency;
  • Set their own rates (without deduction), decide their own hours and use their own tools; and
  • Have any required business or contractor’s license and business tax registration.


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