The ramifications of Assembly Bill 5 (AB5) continues to be a hot issue in employment law. Especially in light of the upcoming election and the introduction of a ballot initiative — Proposition 22 — backed by Uber and other major gig economy players, we’re seeing a growing number of worker misclassification suits. For businesses looking to safeguard themselves against potential litigation, we’re here to help you navigate the complicated nature of AB5. Here is a breakdown of how AB5 affects doctors, as well as other medical professions.

What is Assembly Bill 5 (AB5)?

Assembly Bill 5 (AB5) is a state law that’s been in effect since January 1, 2020. It codifies the “ABC” test, a test that determines whether a worker is an employee as opposed to an independent contractor. In the simplest terms, it reclassifies millions of independent contractors as employees, meaning these “employees” are entitled to the same rights as all your other employees.

For the employer to classify a worker as an independent contractor, it must demonstrate that all the following conditions of the “ABC” 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).

Recently, significant amendments have been added to AB5. A new law signed on September 4th, 2020, Assembly Bill 2257 (AB2257), amends certain sections of AB5, clarifying and adding new statutory exemptions from the test — which apply retroactively where applicable.

Doctors and Certain Medical Professionals are Exempt from AB5

Under AB5’s “Occupational Exemptions” and AB2257, doctors are and will continue to be exempt. Some other medical professionals that are exempt from the “ABC test” include:

• Dentists;
• Physicians;
• Optometrists;
• Physical therapists;
• Veterinarians;
• Podiatrists;
• Psychologists; and
• Surgeons.

This means that the independent contractor status of these medical professionals will be governed by the Borello test, and not the “ABC” test.

On the other hand, AB5 still applies to Physician Assistants, Nurse Practitioners, and Certified Registered Nurse Anesthetists as well as travel healthcare professionals (nurses, therapists, lab techs, and other professions). Healthcare facilities looking to hire these professionals must demonstrate all three prongs of the “ABC test” in order to qualify them as independent contractors.

Key Takeaways

Employers in the medical field should keep these exemptions in mind, especially for the different medical professions. It is important to also remember that the Borello test will still apply for the exempted occupations. As such, we recommend companies enlist legal counsel to assist with an independent contractor analysis and to craft independent contractor agreements that clearly demonstrate that the doctor or medical professional 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.

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.