Running the Business · Part 6

Hiring under AB 5: the ABC test, why a 1099 helper is a lawsuit unless they hold their own license, and the construction subcontract exemption

For a plumbing contractor, the question "employee or independent contractor" has a shorter answer than for most businesses, because two statutes stack: the ABC test in Labor Code 2775 presumes everyone who works for you is an employee unless they run a genuinely separate business doing something other than your business, and Labor Code 2750.5 says nobody doing plumbing work can be an independent contractor without their own contractor's license. The only lawful "1099" on a plumbing job is another licensed contractor under a written subcontract that meets Labor Code 2781's list. This lesson is the two tests, the exemption's conditions, the penalties for getting it wrong (which are per violation and per worker), and the hiring decision that follows.