Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business.

Existing law provides for a system of unemployment insurance providing benefits for persons unemployed through no fault of their own and exempts from the definition of “employment” for that purpose services performed as a real estate, mineral, oil and gas, or cemetery broker or as a real estate, cemetery, or direct sales salesperson, or a yacht broker or salesman, by an individual if certain criteria are met, including that the individual is licensed, as specified, or is engaged in the trade or business of primarily in-person demonstration and sales presentation of consumer products, including services or other intangibles, in the home or sales to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis, for resale by the buyer or any other person in the home or otherwise than from a retail or wholesale establishment.

Existing law exempts specified occupations and business relationships from the application of the ABC test described above, including an exemption for a direct sales salesperson described in the above-described unemployment insurance exemption.

This bill would revise the above-described unemployment insurance exemption to additionally exempt from the definition of “employment” an individual engaged in the trade or business of primarily person-to-person sales activities door-to-door, telephonically, or online or sales to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis, for resale by the buyer or any other person in the home or otherwise than from a contractually required retail or wholesale establishment.