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Established in 1914 by the state legislature, State Fund is California's most reliable provider of workers' compensation insurance and a vital asset to California businesses. State Fund supports California's entrepreneurial spirit and plays a stabilizing role in the economy by providing fairly priced workers' compensation insurance, helping California employers keep their workplaces safe, and restoring injured workers.



Conditional Exemptions

Most California employers must apply the ABC test (for workers’ compensation), effective July 1, 2020. There are some conditional exemptions, however.

The following is a list of conditional exemptions for which the Borello test may still apply, even after July 1, 2020.

NOTE: An injunction is currently in place, restraining the ABC test (per AB 5) from applying to motor carrier operations within the trucking industry. At this time, all motor carrier operations are subject to the 11 factor Borello test for employment status determinations until the injunction is lifted.

Administrator of human resources

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
Contracted work predominantly intellectual and varied. Output produced/result accomplished cannot be standardized in relation to a given period of time None §2750.3(c)(2)(B)(ii)

Business-to-business contracting relationship

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Business service provider must be formed as sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation (if individual worker, exemption does not apply)

Business provider:

  1. is free from control/direction of contracting business
  2. is providing services directly to contracting business, not customers of contracting business
  3. has entered into written contract with contracting business
  4. has business license/tax registration if required in jurisdiction where work is performed
  5. maintains business location separate from business or work location of the contracting business
  6. is customarily engaged in an independently established business of the same nature as that involved in the work performed
  7. actually contracts with other businesses to provide same/similar services. Maintains clientele without restrictions from hiring entity
  8. advertises and holds itself out to the public as available to provide the same or similar services
  9. provides its own tools, vehicles, and equipment
  10. can negotiate its own rates
  11. can set its own hours and location of work if consistent with the nature of the work
  12. is not performing work for which a CSLB license is required
None §2750.3(e)

Commercial fisherman

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Valid, unrevoked commercial fishing license issued pursuant to Division 6, Part 3, Chapter 1, Article 3 of the Fish and Game Code Must be working on an American vessel January 1, 2023 §2750.3(b)(6)

Construction subcontractors

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. The subcontract is in writing
  2. Subcontractor is licensed by the CSLB
  3. Subcontractor has business license/tax registration if required by subcontractor’s domicile
  4. Subcontractor’s business location separate from contractor’s business location
  5. Subcontractor authorized to hire/fire others
  6. Subcontractor must prove assumption of financial responsibility for errors or omissions in labor or services
  7. Subcontractor customarily engaged in independently established business of same nature as work performed
If conditions for exemption met, employment status for individual working for contractor determined by Borello and Labor Code §2750.5 None §2750.3(f)

Construction trucking services

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. The subcontract is in writing
  2. Subcontractor is licensed by the CSLB
  3. Subcontractor has business license/tax registration if required by subcontractor’s domicile
  4. Subcontractor’s business location separate from contractor’s business location
  5. Subcontractor authorized to hire/fire others
  6. Subcontractor must prove assumption of financial responsibility for errors or omissions in labor or services
  7. Subcontractor customarily engaged in independently established business of same nature as work performed

If conditions for exemption met, employment status for individual working for contractor determined by Borello and Labor Code §2750.5. A CSLB license is not required if the all of the following conditions are met:

  1. Subcontractor is a business entity
  2. Subcontractor registered with the DIR as a public works contractor per Labor Code §1725.5
  3. Subcontractor utilizes own employees unless subcontractor is sole proprietor with own truck and valid Motor Carrier Permit
  4. Subcontractor negotiates, contracts with, and is paid directly by licensed contractor
January 1, 2022 §2750.3(f)

Direct salesperson

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
If defined in Unemployment Code §650 None None §2750.3(b)(5)

Enrolled agent

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
None None §2750.3(c)(2)(B)(vii)

Esthetician, electrologist, manicurist, barber, cosmetologist

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
Individual service provider is licensed and: 1. Sets own rates, processes own payments, and is paid directly by clients 2. Sets own hours of work and has sole discretion on number of clients and for which clients will provide services 3. Has own book of business and schedules own appointments 4. Maintains own business license for services offered to clients 5. Issues IRS Form 1099 to salon/business owner from which business space is rented (if services are performed at location of the hiring entity) January 1, 2022, for manicurists only §2750.3(c)(2)(B)(xi)

Fine artist

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
None None §2750.3(c)(2)(B)(vi)

Freelance writer, editor, or newspaper cartoonist

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
No more than 35 submissions to putative employer per year None §2750.3(c)(2)(B)(x)

Grant writer

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
None None §2750.3(c)(2)(B)(v)

Graphic design

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
None None §2750.3(c)(2)(B)(iv)

Insurance broker/agent

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Licensed by Department of Insurance pursuant to Division 1, Part 2, Chapter 5, 6, or 8 of the Insurance Code None None §2750.3(b)(1)

Lawyer, architect, engineer, private investigator, accountant

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Active license from State of California None None §2750.3(b)(3)

Marketing

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion/independent judgment in performance of services
Contracted work must be original/creative in character None §2750.3(c)(2)(B)(i)

Motor club contracted services

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Motor club is licensed pursuant to Division 2, Part 5, Chapter 2 (commencing with §12160) of the Insurance Code Party contracting with motor club must be a separate and independent business from the motor club None §2750.3(h)

Newspaper carrier

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Working under contract with a newspaper publisher or newspaper distributor None January 1, 2021 §2750.3(b)(7)

Newspaper distributor

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Working under contract with a newspaper publisher None January 1, 2021 §2750.3(b)(7)

Payment processing agent

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
Service provided through an independent sales organization None §2750.3(c)(2)(B)(viii)

Physician & surgeon, dentist, podiatrist, psychologist, veterinarian

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Licensed by State of California pursuant to Division 2 of the Business & Professions Code None None §2750.3(b)(2)

Real estate licensee

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Licensed pursuant to Division 4 of the CA Business & Professions Code. Determination as to employment status is governed by Business & Professions Code §10032(b) If Business & Professions Code §10032(b) is not applicable, determination is made under Labor Code §3200 et seq. None §2750.3(d)(1)

Referral agency

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Service provider who contracts with referral agency must be business entity, i.e. sole proprietor, partnership, limited liability company, limited liability partnership, or corporation

Referral agency must satisfy all of the following:

  1. Service provider is free from control/direction of referral agency when providing services to client
  2. Service provider must have business license/tax registration if required in jurisdiction where work is performed
  3. If CSLB license required, service provider must hold such license
  4. Services to client delivered under service provider’s name, not the referral agency’s name
  5. Service provider provides its own tools and supplies
  6. Service provider has own independently established business of same nature as work performed for client
  7. Service provider maintains clientele without restrictions from referral agency. Service provider is free to seek work elsewhere, including through competing referral agency.
  8. Service provider sets own hours and terms of work and is free to accept or reject clients and contracts.
  9. Service provider is not penalized for rejecting clients or contracts prior to signing any contract
None §2750.3(g)

Repossession agency

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Licensed pursuant to Business & Professions Code §7500.2 Agency must be free from control/direction of hiring person or entity in connection with performance of the work, both under contract and in fact None §2750.3(d)(2)

Securities broker-dealer or investment adviser or their agents and representatives

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
Registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed by State of California Title 4, Division 1, Part 3, Chapter 2 or 3 of the Corporations Code None None §2750.3(b)(4)

Still photographer or photojournalist

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
No more than 35 submissions to putative employer per year None §2750.3(c)(2)(B)(ix)

Travel agent services

Condition of Exemption from ABC Test Additional Conditions (if any) Current Expiration of Exemption Labor Code Reference*
  1. Business location separate from hiring entity (but services may be performed at location of hiring entity)
  2. Individual has business and any required professional license
  3. Individual can set/negotiate own rates
  4. Apart from project completion, individual can set own hours
  5. Individual customarily engaged in same type of work with other hiring entity or advertises availability to others to perform same type of work
  6. Individual customarily exercises discretion /independent judgment in performance of services
Services must be provided by either: 1. A person regulated under Division 3, Part 3, Chapter 1, Article 2.6 of the Business & Professions Code, or 2. an individual who is a seller of travel pursuant to §17550.1(a) of the Business & Professions Code and is exempt from registration under §17550.20(g) of the Business & Professions Code None §2750.3(c)(2)(B)(iii)
 

*Note that Labor Code section 3351 was amended to add subsection (i), making Labor Code section 2750.3 applicable to/for workers' compensation insurance on July 1, 2020; it does not apply retroactively. For all other purposes, Labor Code section 2750.3 is effective on January 1, 2020.

Please note: This document and the self-assessment questions regarding your business operations are intended for informational purposes to enable State Fund to provide a quote for workers’ compensation insurance coverage. Any person’s answers to the self-assessment questions are not binding on State Fund for any purpose. State Fund has the right to ask you and/or your broker or workers additional questions to determine the employment status of your workers. We will conduct a premium audit of your policy after policy expiration to determine your actual operations and final premium in accordance with the terms of your policy and applicable laws.

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