At the beginning of 2020, a bill went into effect that required companies in California that hire any independent contractors to reclassify these contractors as employees. This law is known as AB-5 and has since been altered a couple of times to exempt certain job categories from being affected. While there are some positive aspects of the AB-5 bill, there are also many unintended side effects that have caused confusion among gig workers and certain independent contractors. The same is true with in-home tutoring. The question is if tutors would be classified as independent contractors or employees. This article takes an in-depth look at the AB-5 law and what role it plays with in-home tutoring throughout California.
What the AB-5 Law Entails
The California Assembly Bill 5 legislation was initially signed by Governor Newsom back in 2019 before it went into effect at the beginning of 2020. This law requires businesses to classify certain independent contractors as employees. Towards the end of 2020, Assembly Bill 2257 was passed by the California legislature to exempt a significant number of different job categories. Any independent contractor who is reclassified as an employee is entitled to unemployment benefits, workers’ compensation, paid family and sick leave, health insurance, and other types of employee benefits.
Under this law, workers are automatically considered to be employees unless the business that hires them is able to prove that:
- The worker can perform the services without needing direction or control from the company.
- The worker is completing tasks that fall outside the standard course of business activities.
The worker is involved in an independently established business, trade, or occupation that matches the work they perform as an independent contractor.
If the company in question is unable to prove all three of these things, the worker would need to be classified as an employee with full benefits.
How Workers Are Affected By the AB-5 Law
Once the AB-5 bill was made into law, many workers were immediately affected. Some independent contractors instantly become employees at the beginning of 2020. Along with employee benefits, these workers receive rest breaks, minimum wage, and expense reimbursements. For some gig workers, a problem with this law was that it created issues with the ability they had to choose when they worked. Workers who are classified as employees don’t have the same flexibility in setting their own hours.
To best understand how workers are affected by this law, it’s important to look at the employees who are exempt from the law and the employees who are currently affected by it. The different types of employees who are largely exempt from AB-5 include:
- All kinds of doctors
- Certain licensed professionals, which include engineers, lawyers, and architects
- Commercial fishermen
- Real estate agents
- Professionals who offer financial services, which include investment advisors, insurance brokers, and accountants
- Contractors and builders
- People who provide professional services, which include marketers, travel agents, grant writers, and graphic designers
- Freelance writers and photographers
- Hair stylists and barbers
It’s also important to take note of the jobs that are currently being affected by the AB-5 law, which extend to:
- Delivery and rideshare services, which include Uber, DoorDash, and Lyft
- Language interpreters
- Campaign workers
- Truck drivers
- Health aides, which include people working in assisted living facilities and nursing homes
- Land surveyors
- Newspaper carriers
- Unlicensed manicurists
Confusion Associated with Home Tutoring in California
When it comes to in-home tutoring, there has been some confusion over how the AB-5 law affects tutors and what it means for this profession. In some cases, tutors are exempt from the AB-5 law, which means that they can provide their services without needing to be counted as employees. However, tutors are only exempt from the law if they teach their own curriculum. What this means is that public-school tutors are not exempt from the law.
For parents who are considering hiring in-home tutors to provide assistance for their children, it’s important to understand if a tutor can be brought in as an independent contractor or an employee. When hiring a tutor as an employee, parents must adhere to state laws regarding minimum wage, workplace safety, work hours, and retaliation laws. For instance, the minimum wage is $13 per hour for businesses with less than 26 employees. While some parents have called for Governor Newsom to create a full exemption for in-home tutors, this exemption has yet to be made.
For parents to hire tutors as independent contractors, the three guidelines mentioned previously must be followed. For one, the tutor must be free to perform their work without direction or control from the parents who hire them. While the second guideline about the worker needing to perform work that falls outside of the hiring entity’s business is automatically fulfilled in this situation, the third guideline may be the trickiest to navigate.
What this guideline states is that the worker needs to be involved in an independently established business, trade, or occupation that matches the work they are performing as a tutor. To that end, parents will likely need to perform research when hiring a tutor. First, parents must hire tutors who have their own business that provides tutoring services. Once hired for tutoring purposes, the tutor is unable to perform work that they don’t usually offer, which can include anything from providing childcare to completing household chores.
In the event that the parent would like to hire the tutor to perform additional services, the tutor would need to be classified as an employee, which means that full employee benefits must be provided. Keep in mind that the penalties associated with the misclassification of contractors are severe in California. Willfully misclassifying an independent contractor comes with a civil penalty of $5,000-$25,000 for every violation.
Even though the AB-5 law can be confusing for tutors and anyone who wishes to provide tutoring services, it’s possible for tutors to be hired without needing to be classified as independent contractors. Whether you are working as a tutor in California or would like to hire a tutor for your child, it’s important to understand what this law does and how it can apply to your situation.