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PN 04 99 08 ( Ed . 1249 ) POLICYHOLDER NOTICE CALIFORNIA ASSEMBLY BILL NO. 5 , INDEPENDENT CONTRACTORS Summary of Assembly Bill No . 5 (AB 5) For the purposes of wages , workers' compensation and other benefits , AB 5 creates a presumption that an entity's workers are employees unless the hiring entity can show that the worker meets three conditions , known as the "ABC Test ' . With respect to workers ' compensation , AB 5 goes into effect on July 1 , 2020 and applies to policies issued on or after July 1 , 2020 , as well as policies in force as of July 1 , 2020 . The bill adds Section 2750 . 3 to the California Labor Code , which provides in pertinent part: 2750 . 3 . (a) ( 1 ) For purposes of the provisions of this code and the Unemployment Insurance Code , and for the wage orders of the Industrial Welfare Commission , a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied : (A) The person is free from the control and direction of the hiring entity in connection with the performance of the work , both under the contract for the performance of the work and in fact. ( B) The person performs work that is outside the usual course of the hiring entity's business . (C) The person is customarily engaged in an independently established trade , occupation , or business of the same nature as that involved in the work performed . (2 ) Notwithstanding paragraph ( 1 ) , any exceptions to the terms "employee , " "employer, " "employ , " or " independent contractor, " and any extensions of employer status or liability , that are expressly made by a provision of this code , the Unemployment Insurance Code , or in an applicable order of the Industrial Welfare Commission , including , but not limited to , the definition of "employee" in subdivision 2( E ) of Wage Order No . 2 , shall remain in effect for the purposes set forth therein . (3) If a court of law rules that the three-part test in paragraph ( 1 ) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2) , then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Court' s decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations ( 1989) 48 Cal . 3d 341 . AB 5 also provides an extensive list of occupations that are exempt from the application of Section 2750 . 3 (a) ( 1 ) . These exemptions are subject to revision . In addition , AB 5 amends Section 3351 of the California Labor Code and Sections 606 . 5 and 621 of the Unemployment Insurance Code . The pertinent sections of the California Labor Code and Unemployment Insurance Code may be accessed at http : //Ieginfo . legislature . ca . gov. You may also access the California Labor & Workforce Development Agency webpage at hftps : //www. labor. ca , gov/emr) lovmentstatus/ for more information . This notice does not change the policy to which it is attached .