EmploymentQuestion 645 of 690
Under Labor Code §2781 (the construction-subcontractor exception to AB-5), a bona fide business-to-business relationship requires, among other things, that the subcontractor:
a.Is properly licensed under Bus. & Prof. Code §7000 et seq., has the required business license, maintains its own business location, and has a written contract — among other criteria
b.Has at least 10 employees of its own
c.Owns its own real property used for business
d.Has been in business for at least 3 years and has filed corporate tax returns
Explanation
Labor Code §2781 provides a separate, more permissive test for construction subcontractors: the sub must (1) be licensed by the CSLB, (2) have all required business licenses and tax registration, (3) have a written contract that specifies payment and scope, (4) maintain a separate business location, (5) have the right to hire and fire, (6) be customarily engaged in an independently established business, (7) provide its own tools and vehicles, and (8) negotiate its own rates. There is no 10-employee, real-property-ownership, or 3-year-in-business requirement. If §2781 criteria are not met, the AB-5 ABC test of §2775 applies instead.
Law Reference: Labor Code §2781Practice all 690 questions free — no signup required.
Related questions on this topic
- An employee accrues paid sick leave under the statutory method, but does not use any of it by the end of the year. Under Labor Code §246(d), what must happen?
- Which of the following items is NOT required to appear on an itemized California wage statement under Labor Code §226?
- Under California's ABC test codified in Labor Code §2775 (AB-5), a worker is presumed to be an EMPLOYEE (not an independent contractor) unless the hiring entity proves all three of the following EXCEPT:
- IWC Wage Order 16, which covers on-site construction, drilling, logging, and mining, generally requires that non-exempt workers receive an unpaid meal period of at least:
- Under Labor Code §226.8, a contractor who willfully misclassifies an employee as an independent contractor faces a civil penalty of:
- A contractor pays drywall hangers on a piece-rate basis (per linear foot installed). Under Labor Code §226.2, the contractor must separately pay piece-rate workers for:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against California CSLB Contractor License Law & Business Exam · How we review