Bill that loosened some AB 5 restrictions becomes immediate law

A bill that loosens the restrictions of Assembly Bill 5 for journalists, musicians, underwriters, performing artists and a variety of other professionals was signed into law by Gov. Gavin Newsom on Friday, following what the bill's author called "robust dialogue over the last year with workers and businesses from every part of the state."

AB 2257, introduced by AB 5's author, Assemblywoman Lorena Gonzalez, D-San Diego, is an urgency statute that went into effect immediately.

The new law expands the types of business contracting relationships that will be subject to the Borello standard for determining whether a worker is an employee or an independent contractor. The Borello test, which has 11 factors, was the decades-old standard used in California to define employment relationships before the state Supreme Court concluded a three-pronged "ABC" test was the appropriate standard in Dynamex Operations Inc. v. Superior Court, 2018 DJDAR 3856. Dynamex was codified by AB 5, which went into effect Jan. 1.

AB 2257 removes a provision in AB 5 that stated freelance writers, editors and photographers were subject to the "ABC" test after they've provided more than 35 submissions to a single employer. The new law replaces that provision with the stipulation that employers can use the Borello test to classify their freelancers if they meet criteria such as providing freelancers with contracts that specify their rates of pay and intellectual property rights.

Under the bill, musicians, vocalists, composers songwriters, and other production professionals can collaborate with one another without being subject to the "ABC" test, while performance artists who set their own terms of work and perform their own original material will also be exempt from the three-pronged test.

Other circumstances and professionals that will be subject to Borello instead of AB 5 include some individuals who contract with each other to provide services at single events; individuals who give feedback to businesses, research institutions, and other organizations; underwriters, appraisers, home inspectors, individuals who conduct international exchange visitor programs, and competition judges.

The law also gives district attorneys authority to enforce AB 5, and clarifies the circumstances in which AB 5 applies to referral agencies that contract with businesses, as well as business-to-business contracts.

AB 2257 is one of several bills introduced by legislators to amend or repeal AB 5, which has faced criticism from various industries and legislators since it went into effect this year. AB 5 has also spawned a wave of litigation challenging its application to specific industries, including a lawsuit by freelance journalists looking to challenge the 35-submission cap they were previously subject to.

"AB 2257 represents a comprehensive framework for employment law that makes a clear distinction between employer-employee relationships and professionals that run their own independent businesses," Gonzalez said in a statement Friday. The statement added the law "strikes a balance and continues to provide protections for workers against misclassification that had previously gone unchecked for decades under the old rules."