EmploymentQuestion 954 of 1605
AB 5 contains a special provision for legitimate construction subcontracting. For a bona fide subcontractor relationship in construction to be evaluated under Borello rather than the strict ABC test, the subcontractor generally must:
a.Be paid entirely in cash
b.Simply sign a paper calling itself a subcontractor
c.Hold a valid contractor's license and meet specified business-legitimacy criteria
d.Have fewer than two employees
Explanation
AB 5 (Labor Code §2781) provides a business-to-business/construction subcontracting exception under which a legitimate licensed subcontractor is evaluated under Borello, not the strict ABC test, if it meets criteria such as holding the required contractor's license, being customarily engaged in an independent business, having its own business location, and being free to contract with others. A mere label, cash payment, or head count does not qualify a relationship for the exception.
Law Reference: Labor Code §2775 et seq.; construction exceptionPractice all 1605 questions free — no signup required.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)