It does not apply to claims under the Fair Employment and Housing Act. AB5 applies to claims covered by the Labor Code the Unemployment Insurance Code, and as of July 1, 2020, the Workers’ Compensation Code. Anyone who falls into the exception will be subject to evaluation under the old, and more lenient, Borello test which considers many other factors. The exceptions include hair stylists, real estate licensees, subcontractors in the construction industry, insurance agents, securities brokers, certain direct sales employees, physicians, attorneys, and accountants. established the ABC test to determine if a worker is properly classified as an independent contractor or if they should be deemed an employee (for purposes such as workers’ compensation coverage, minimum wage, meal and rest periods, etc.) The ABC test requires the company to prove: (A) the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact (B) that the worker performs work that is outside the usual course of the hiring entity's business and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.” AB-5 codifies the ABC test but also creates several exceptions to this strict test. Independent Contractors - AB5 and the “ABC Test” – In 2018, the landmark case of Dynamex Operations West, Inc. Please note that many other cities and counties in California have passed higher minimum wage requirements (Belmont, Berkeley, Cupertino, El Cerrito, Emeryville, Los Altos, Los Angeles City and County, Malibu, Mountain View, Novato, Oakland, Palo Alto, Pasadena, Redwood City, Richmond, San Diego, San Francisco, San Jose, San Leandro, San Mateo, Santa Clara, Santa Monica, South San Francisco, and Sunnyvale). Action: Review your payroll to ensure all employees are being paid the new minimum wage, send written notice of the wage change to affected hourly employees, and be sure your salaried exempt employees are earning at least 2x California minimum wage ($54,080 for large employers and $49,920 for small employers).
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