Business FinancesQuestion 507 of 1632

Under California AB 5, what must a hiring contractor demonstrate to classify a worker as an independent contractor under the "ABC test"?

a.Control, outside the usual business, and a trade
b.Only that the worker signed a 1099 form
c.That the worker brings his own tools
d.That the subcontractor holds a CSLB licence

Explanation

The ABC test in Labor Code section 2775(b)(1) presumes a worker is an employee unless the hiring entity proves all three: (A) the worker is free from the control and direction of the hirer in performing the work; (B) the work is outside the usual course of the hirer's business; and (C) the worker is customarily engaged in an independently established trade of the same nature as the work performed. All three, not the best two. A 1099 is a tax form the hirer issues and proves nothing about the relationship. Bringing tools and setting hours is the old common-law control factor, which survives inside prong A but is not the test. And the CSLB licence is the most instructive wrong answer: it is a real requirement, but of section 2781 - the construction-subcontractor exception, which takes a relationship OUT of the ABC test altogether if the contractor shows a written subcontract, a licensed subcontractor working within its licence, a separate business location, authority to hire and fire, and five more conditions.

Law Reference: Labor Code §2775(b)(1); §2781(a)

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