AB 2257: The ‘clean up’ bill for California’s landmark worker classification law, AB 5

For many years, worker classification has been an ongoing issue in California. From Borello to Dynamex, the laws governing independent contractor status were upended, leaving employers to adjust on the fly. California then doubled down in 2019 with Assembly Bill 5, codifying the Dynamex "ABC test" into state law. However, what followed AB 5 was a wave of related legislation to amend, repeal, or replace the law. Due to a COVID-shortened 2020 legislative session, one bill emerged from the pack: AB 2257.

AB 2257 was signed into law as an urgency measure, meaning it took effect immediately upon signing. AB 2257 maintains the essential framework of its predecessor, but cleans up several areas. The new bill repealed the original language of AB 5 and added new sections to the Labor Code with updated language. The big difference is that each exception is now set out in its own code section instead of subsections. Additionally, the new text makes clear the law applies to the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission's wage orders.

AB 2257 also added 53 new exemptions, for a total of 109 exemptions, including:

• Translators

• Copy Editors

• Producers

• Cartographers

• Recording artists, composers, songwriters

• Home inspectors

• Appraisers

• Manufactured housing salespersons

• Professional foresters

• Performance artists

• Competition judging

• "Single-Engagement" Business-To-Business (which has to do with individual businesspersons who contract with one another "for purposes of providing services at the location of a single-engagement event.)

Noticeably absent from the list of industry exemptions are app-based gig economy companies, the thrust behind the recently passed Proposition 22.

Retroactivity

AB 2257 provides that, to the extent any of the exceptions "would relieve an employer from liability, those sections shall apply retroactively to existing claims and actions to the maximum extent permitted by law." Therefore, any exception used as a defense to liability applies retroactively.

Although statutory clarifications generally apply retroactively, a statute will not be applied retroactively unless it is clear that the legislature intended a retroactive application. While the subdivision that codifies the ABC test has no express retroactivity language, as just mentioned, the subdivision concerning the exceptions to the ABC test does have such language. That distinction is significant because it is generally recognized that when the legislature uses a term in one statute and deletes it from another, it is presumed to have acted deliberately. Ultimately, questions regarding the overall retroactivity of AB 2257 remain, and we may expect continued litigation on this issue.