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I have been reading at various sources that beauty salon workers that have independent contractor status would be reclassified as employees starting from 2020 throughout the California. Presumably through the AB-5 that would force some industries to use the Dynamex ABC test instead of Borello test.

However, when I open AB-5 it appears to have exclusion for barbers and cosmetologists:

The bill would exempt specified occupations from the application of Dynamex, and would instead provide that these occupations are governed by Borello. These exempt occupations would include, among others, licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, direct sales salespersons, real estate licensees, commercial fishermen, workers providing licensed barber or cosmetology services, and others performing work under a contract for professional services, with another business entity, or pursuant to a subcontract in the construction industry.

So am I reading the law incorrectly? Or for salon workers performing cosmetology and barbering services nothing changes in 2020 as their status would still be determined by Borello test (just like it has been all the time)?

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The exemption is not unconditional

(xi) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:

(I) Sets their own rates, processes their own payments, and is paid directly by clients.

(II) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.

(III) Has their own book of business and schedules their own appointments.

(IV) Maintains their own business license for the services offered to clients.

(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.

(VI) This subdivision shall become inoperative, with respect to licensed manicurists, on January 1, 2022.

I imagine there are a significant number of operations that don’t meet the exemption criteria.

  • But aren't exemption conditions (I)-(V) you listed effectively derived from Borello test that has been in effect for the last 30 years? If I understand correctly, then without this exemption Booth renters would have become Employees under the new ABC test. – user9999123 Jan 18 '20 at 20:49

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