AB 2257 forces you to use a single contract that spells out exact pay, tool‑and‑material responsibilities, and separate business addresses, so auditors see a trail. It makes the Dynamex ABC test the default rule and limits it to a list of high‑risk occupations, eliminating the vague total‑of‑circumstances analysis for most workers. New B2B and referral‑agency exemptions give statutory shortcuts, and the version‑controlled repository with reviews lets you verify compliance instantly, setting the stage for smoother

Key Takeaways

• The amendments mandate written contracts that detail payment, rates, dates, and tool/material responsibilities, creating clear audit‑ready documentation.
• They establish a single‑engagement exemption with standardized addenda, simplifying verification of one‑off work without extensive classification analysis.
• By codifying the ABC test and specifying exact worker categories that trigger it, auditors can quickly determine classification compliance.
• Required quarterly clause reviews and version‑controlled change logs ensure continuous alignment with audit criteria and reduce retrospective discrepancies.
• Centralized, secure repository retention of signed agreements provides auditors immediate access to complete, immutable records for compliance checks

What AB 2257 Changes for Employers?

What does AB 2257 mean for you as an employer? It delivers Policy Updates that reshape exemption rules, letting you contract with other businesses without mandatory reciprocal contracts and allowing a provider’s residence as a place of business. You must draft written contracts that state payment amount, rate, due date, and who supplies tools and materials. The Referral Agency Exemption now covers youth sports coaching, interpreting, and consulting, while excluding high‑hazard and janitorial work, applying the ABC test to each referral. A Single‑Engagement Exemption permits one‑off events at separate locations, provided you and the contractor negotiate rate and retain control in writing. New exemptions add data aggregators, performance artists, and recording professionals, each with specific condition checklists. These changes trigger Payroll Adjustments to align wages with the defined rate and schedule, and require you to track compliance under the newly created Labor Code sections 2775‑xx. Non‑compliance raises potential. AB 2257 expands the exemption list to 109 worker categories across multiple industries.

How the ABC Test Is Redefined Under AB 2257

Because AB 2257 codifies the Dynamex ABC test into Labor Code §2775, it now serves as the default standard for determining whether a worker is an employee. You must satisfy all three prongs—control, within the usual course, and no custom relationship—to classify a worker as an independent contractor. The amendment introduces Prong Adjustments by preserving the strict three‑prong structure while allowing a jurisdiction shift for listed exemptions. When a profession falls under the new exemption list—fine artists, freelance writers, insurance underwriters, etc.—the test pivots to the Borello multifactor analysis, effectively shifting jurisdiction from the ABC regime to Borello’s totality‑of‑circumstances framework. Business‑to‑business relationships also benefit from a relaxed trigger; vendor staff who interact directly with client customers no longer auto‑fail the test. Consequently, the ABC test’s core remains intact, but its application narrows for the expanded exempt classes, simplifying compliance assessments and reducing audit risk. Additionally, AB 2257 repealed § 2750.3 and introduced §§ 2775‑85 as the new governing

Which Workers Still Must Pass the ABC Test?

How can you identify the workers who still have to meet the ABC test? Look for any role that lacks a professional or occupational license and is not listed in the AB 2257 exemptions. Truck Drivers, Janitorial Workers, delivery couriers, agricultural laborers, retail clerks, loggers, and in‑home care aides all fall under the standard ABC test. Likewise, construction subcontractors without a required license must satisfy the Borello test, not the ABC test, but their unlicensed laborers remain subject to ABC requirements. Use the table below to confirm each category.

If any of your workers appear in the left column, you must evaluate control, price, and “to be engaged” criteria under the ABC test before classifying them as contractors. Failure to do so can trigger reclassification penalties and back‑pay liabilities

New Exemption Categories: B2B, Referral Agencies, and Industries

The new exemption categories—business‑to‑business (B2B), referral agencies, and specific industries—shift many contractor relationships from the ABC test to the Borello standard. Under the B2B exemption, sole proprietors and public agencies may enter B2B contracts that treat the provider as an independent business. The contract must list payment amount, rate, and due date, and it may permit the provider to serve the contracting business’s customers using its own employees and name. You can also contract with other businesses without the “actually” requirement. For single‑engagement work at one location, the exemption applies even if the worker is an individual. Referral scopes now cover consulting, youth sports coaching, caddying, wedding planning, vendors, and interpreting, but exclude high‑hazard, janitorial, delivery, trucking, agricultural, retail, logging, in‑home care, and most construction referrals. These exemptions apply retroactively, and the Borello test—not the ABC test—govern them, giving district attorneys clear enforcement authority in.

Additionally, AB 2257 adds a musical artist exemption that lets recording artists, songwriters, and live performers operate as independent contractors when meeting defined

Freelance Media Professionals: What the Updated Rules Mean

Where do the recent AB 2257 changes leave freelance media professionals? You now retain independent status regardless of how many pieces you produce, as the 35‑submission cap is gone. To qualify, you must have a written contract that spells out rate, IP rights, and payment deadline, and you cannot let the hiring entity replace you with an employee doing the same volume of work. You must work offsite, using your own equipment, which preserves the exemption for photographers, videographers, illustrators, and editors. These rules let you pursue broader client diversification without risking reclassification. Your revenue models can now scale across multiple outlets, because each contract stands on its own criteria. The shift to a multi‑factor Borello test simplifies audits, reducing misclassification disputes and giving you clearer compliance pathways while maintaining worker protections. Stay proactive in updating each agreement and tracking project locations to maintain ongoing compliance throughout your. The legislation also clarifies that the business‑to‑business exemption now requires true freedom to serve multiple clients

Step‑by‑Step Audit Checklist for AB 2257 Compliance

Having clarified that freelancers can keep independent status under AB 2257, you should follow a structured audit checklist to verify each contract meets the law’s control, compensation, and location criteria. Begin with control: confirm the written agreement spells out supervisory expectations and the hiring entity’s authority under the Borello test. Next, verify compensation: confirm the rate is negotiated, documented, and reflects arm‑length pricing. Then, check business locations: both parties must list distinct physical or virtual addresses. AB 2257’s professional exemption requires a written agreement that includes rate, scope, and payment schedule.

Use this quick reference table for audit reminders:

Finally, run your compliance checklists before filing. Update contracts for any missing tool, material, or single‑engagement language. Document all changes to stay audit‑defensible. Keep these audit reminders handy, review each clause quarterly, and retain signed copies in a secure repository for future regulatory inspections

Frequently Asked Questions

Does Ab 2257 Apply Retroactively to Existing Contractor Agreements?

Yes, AB 2257 applies retroactively to your legacy contracts when the provisions relieve employer liability. The retroactive scope covers sections 2776‑2784, granting exemptions—such as the B‑to‑B and referral agency exemptions—to agreements that already exist. You’ll see liability removed only where the statute expressly relieves it; other obligations remain unchanged. Make sure each contract meets the exemption criteria, or the default ABC test will still govern. Consult counsel to confirm compliance and

How Does Ab 2257 Affect Workers’ Compensation Insurance Requirements?

Imagine your insurance policy as a tide that rises or recedes with each contractor classification. AB 2257 forces you to apply the ABC test; if a worker fails any element, you’ve got to treat them as an employee, expanding your workers’ compensation obligations. It’s that reshapes premium calculations, pushes coverage limits higher, and may require you to secure policies for exempt contractors. Conversely, exemptions keep you from unnecessary coverage in practice

What Documentation Must Contractors Retain to Prove Exemption Status?

You’ve got to keep a complete set of documents proving your exemption: licensure certificates, permits, and registrations; contracts showing control, direction, and negotiation freedom; fee‑arrangement records; Borello test analyses; and proof of separate business locations. Store these under a Document Storage system and follow Retention Policies that preserve each record for at least three years, accessible for audit or legal review. Verify electronic backups are encrypted and indexed for

Do Unionized Freelancers Receive Different Treatment Under Ab 2257?

Think of AB 2257 as a single‑speed bike—whether you’re on collective bargaining or not, the gear stays the same, so unionized freelancers get the same treatment as non‑union freelancers. The law applies uniformly, ignoring union rights in classification. It maintains the ABC Test as default, with Borello only for qualifying media freelancers, regardless of union status, so you’ll face identical criteria and documentation requirements as any other independent contractor under

Can a Public Agency Hire Contractors Without Using the Borello Test

Yes, you can hire contractors without applying the Borello test when a borello exemption applies. Under AB 2257, agencies may classify licensed professionals, B2B entities, or construction subcontractors that meet the exemption criteria. If you document the exemption in your agency workflow, the contractor is treated as an independent business, not an employee, and you avoid the multi‑factor Borello analysis. You’ll also reduce audit risk and streamline compliance reporting for

Conclusion

You’ve now seen how AB 2257 reshapes the ABC test, adds B2B and referral‑agency exemptions, and clarifies which freelancers stay covered. By updating job descriptions, documenting business‑to‑business contracts, and running the audit checklist, you’ll avoid costly re‑classification disputes. For instance, a SaaS firm re‑engineered its contract with a freelance UI designer as a B2B arrangement, passed the new test, and saved $45 k in penalties. Follow these steps and stay compliant throughout 2024 and beyond,

James Bateson

Lawyer