24Apr 2020

Assembly Bill 5 – Redefining Employment Status for Workers’ Compensation Effective July 1, 2020

Assembly Bill 5 changed the 30-year-old test to determine employment status of California workers effective January 1, 2020 for wage orders, and effective July 1, 2020 for workers’ compensation purposes. The bill created a new “ABC Test”, replacing the previous Borello test to determine employment status, yet the Borello test remains applicable to 39 conditionally exempt occupations.

State Fund has developed an Employment Status Resource Center for our brokers, policyholders, workers, and potential customers to learn more about employment status determinations and how AB 5 may impact their business or employment status. The resource center provides information regarding the new “ABC Test”, conditionally exempt occupations outlined in Labor Code section 2750.3, and information regarding the Borello test and when that test may apply. You can also access a webinar recording of our AB 5, Who Is an Employee? presentation in the resource center.

We recommend all employers review and clearly classify the relationships with their workers who are currently classified as independent contractors as soon as possible so that the appropriate payroll exposures can be accounted for. The earlier premium is adjusted the sooner State Fund can work with policyholders to potentially apply a mid-year payment plan if needed.

State Fund is monitoring potential legislation challenging AB 5 and will provide updates when they become available. Also, additional live AB 5 webinars are planned starting in late May and we will notify you when these webinars are scheduled.

We understand that AB 5 has broad implications for you and your clients and we appreciate your willingness to work closely with us over the coming months.

Feel free to contact our customer support at (888) 782-8338 with any questions.

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