In light of the recent passage of Proposition 22, Assembly Bill 5 (AB5) continues to be a heated topic in employment law. It still affects how companies, both in-state and out-of-state, conduct business throughout the state of California, bringing about serious changes to a myriad of industries – the architectural industry included. Here’s a breakdown of how AB5 affects architects.

What is Assembly Bill 5 (AB5)?

Assembly Bill 5 (AB5) is a state law that codifies the “ABC” test, and has been in effect since January 1, 2020. AB5 sets this test as a default test for worker classification throughout the state of California. In simpler terms, the “ABC” test reclassifies millions of independent contractors as employees, meaning they are entitled to the same rights as all your other employees. For the hiring entity to classify a worker as an independent contractor, it must demonstrate that all the following conditions of the test are satisfied:

A. The person is free from the control and direction of the hiring entity in the performance of the work.

B. The person performs work that is outside the usual course of the hiring entity’s business.

C. The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Parts B and C are two new factors that were never before part of California’s independent contractor analysis under Borello, the previous multi-factor test from S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989). Although recently amended by Assembly Bill 2257 (AB2257), AB5 is still the default standard for independent contractor classifications in California.

Certain Architects are Exempt from AB5 

Under AB5’s “Occupational Exemptions” (as well as AB2257), architects have been granted exemption, along with attorneys, accountants, and direct salespeople. However, not all architects are exempt from AB5. This exemption only applies to architects who hold an active professional license from the State of California. To be exact, AB5 states that “Occupational Exemptions” only apply to those “who hold[s] an active license from the State of California and are practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.”  Therefore, those without an active California State license are subject to the “ABC” test to qualify as an independent contractor. 

It is important to keep in mind that architects are still governed by the Borello multi-factor test when determining whether they will be classified as an employee.

Key Takeaways

Companies that work with architects must check if their architects are licensed in California. If not, these employees will be subject to the “ABC” test instead of the Borello test. With this in mind, we recommend companies to enlist legal counsel to assist with an independent contractor analysis and craft independent contractor agreements that clearly demonstrate that the architect meets the applicable standards to avoid potential litigation.

If you need any assistance with an independent contractor analysis or crafting a legally compliant independent contractor agreement, contact Hackler Flynn & Associates.

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DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post. Hackler Flynn & Associates is only licensed to practice in California.

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DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post. Hackler Flynn & Associates is only licensed to practice in California.

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