Home Page
  • Home
  • Get A Quote
    • Bonds
    • Business & Commercial
    • Commercial Auto Insurance
    • Workers Compensation
  • Blog
  • Make a Payment
  • Resources
    • Secure File Area
    • Refer a Friend
    • Important Links
    • Free Reports
    • Insurance Glossary
  • About Us
    • About Bridge Business Insurance Solution
    • Our Locations
    • Privacy Policy
  • Contact
    • Contact Us
postheader postheader postheader postheader postheader postheader
Home > Blog > WHAT CALIFORNIA ASSEMBLY BILL 5 (CA AB 5) MEANS FOR WORKERS’ COMPENSATION INSURANCE
TUESDAY, FEBRUARY 25, 2020

WHAT CALIFORNIA ASSEMBLY BILL 5 (CA AB 5) MEANS FOR WORKERS’ COMPENSATION INSURANCE

California Assembly Bill 5 (also known as CA AB 5) was signed into law in September 2019, implementing a new test all employers must use to determine if a worker is an employee or an independent contractor under the California Labor Code. The law may impact who must be covered under an employer’s workers’ compensation policy.

While the bill is effective January 1, 2020, the part that affects workers’ comp coverage goes into effect July 1, 2020.

LET’S GET STARTED …

Who’s an Employee and Who Isn’t

The change requires employers with workers in California to use a 3-pronged test (known as the ABC test) to determine whether a worker is an independent contractor. The test assumes a worker is an employee unless the company can prove all of the following:
A. The worker is free to perform services without the control or direction of the company.
B. The worker is performing work tasks that are outside the usual course of the company’s business activities.
C. The worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

How might the test requirements apply?

Scenario: Molly Thomas, a licensed electrician, is hired by Stub Pub, a new sports bar, to update the wiring in an older building they bought. It takes about a week, and the electrical work is completed before Stub Pub’s scheduled grand opening.
Conclusion: Molly is not an employee of Stub Pub and therefore not covered by the pub’s workers’ compensation plan.

Here’s Why

A. Molly was not under the control or direction of Stub Pub related to the work she performed – the installation of the new wiring.
B. Work performed by Molly was outside of the usual course of Stub Pub’s business – electrical vs food service.
C. The work Molly did for Stub Pub is consistent with the work she’s customarily engaged in providing to other businesses (not just Stub Pub) and homeowners – electrical services.

CERTAIN CLASSES MAY BE EXEMPT
The classes below are examples of those that may be exempt from the new test if certain conditions are met.
They may still be subject to the Borello test.

• Accountant
• Architect
• Dentist
• Direct Salesperson
• Engineer
• Lawyer
• Physician and Surgeon
• Podiatrist
• Private Investigator
• Psychologist
• Securities | Investment Advisor
• Veterinarian

ADDITIONAL DETAILS
YOU NEED TO KNOW

• The new legislation is not based on policy effective date. All employers with workers’ compensation policies inforce as of July 1, 2020 will be subject to the new test. This means that a worker could be classified as an independent contractor before July 1, 2020 and as an employee after July 1, 2020.
• To avoid an unexpected change in exposure at the time of premium audit, employers must include payroll for all employees defined by the statute as of July 1, 2020.
• The statute applies to businesses headquartered in California AND businesses headquartered elsewhere with employees working in California.
• If an employer hires a contractor who maintains workers’ compensation insurance for themselves and all other workers under the contract for the period of the policy (must provide a certificate of insurance), The Hartford will not include payments to that contractor as payroll under the policy.

 

By The Hartford

 

Posted 10:19 AM

Tags: bridge business insurance solution, bbis inc, shin simon yang, work comp, workers compensation, xmod, experience modification, rate, wcirb, subcontractor, sub contractor, independent contractor, california awwembly bill 5, ca ab 5
Share |


No Comments


Post a Comment
Required
Required (Not Displayed)
Required


All comments are moderated and stripped of HTML.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015

  • bbis inc(52)
  • work comp(50)
  • xmod(35)
  • workers' compensation(29)
  • bridge business insurance solutions(28)
  • rate(24)
  • shin simon yang(23)
  • wcirb(22)
  • experience modifications(20)
  • workers compensation(19)
  • experience modification(15)
  • bridge business insurance solution(13)
  • certified advisor(9)
  • work comp certified adviser(9)
  • classification(9)
  • covid(8)
  • work safety(7)
  • bbis corporation(6)
  • 19(6)
  • lower(5)
  • shin yang(4)
  • bbis corp(4)
  • california(3)
  • fraud(3)
  • claim(3)
  • bond(3)
  • corona(3)
  • osha(3)
  • contractor bond(3)
  • covid-19(2)
  • sb1159(2)
  • exclusion(2)
  • independent contractor(2)
  • sb 1159(2)
  • reporting(2)
  • auto repair(2)
  • sub contractor(2)
  • handyman(2)
  • contractor's bond(2)
  • bridge buisiness insurance solutions(2)
  • class code(2)
  • prevention(2)
  • subcontractor(2)
  • bbis(2)
  • dir(2)
  • advisor(1)
  • document(1)
  • meal delivery(1)
  • adviser(1)
  • protection(1)

View Mobile Version
 
  • Employers
  • Amtrust
  • State Compensation Insurance Fund
  • Guard Insurance Companies
  • Hartford
  • Allstate
 

HOME PAGE ABOUT US GET A QUOTE REFER A FRIEND CONTACT US

Mailing Address | 24307 Magic Mountain Pkwy. Suite 534 | Valencia, CA. 91355 | 213.605.1348

Logo

 
Powered by Insurance Website Builder