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:

Explanation

Labor Code §2781 sends a bona fide construction subcontract to the Borello test instead of the ABC test only where the sub is licensed by the CSLB, the agreement is in writing and states payment and scope, the sub holds the required business license or tax registration, maintains its own business location, is free to hire and fire and to contract with others, is customarily engaged in an independent business of the same nature, and assumes financial responsibility for errors through insurance, indemnity, bonds or warranties. (a), (b) and (c) are all plausible-sounding business-legitimacy proxies that appear nowhere in the section: there is no property-ownership test, no minimum time in business, and no head count - a one-person licensed sub can qualify while a ten-employee unlicensed crew cannot. Where no license is required, the separate §2776 business-to-business exemption applies instead.