Home/Bills/AB 816California · 2025–2026 Regular Session

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AB 816: Employment: employees and independent contractors: merchandisers.

California · Assembly · 2025–2026 Regular Session · last verified February 3, 2026

What AB 816 does, verified February 3, 2026

This bill creates an exemption for a merchandiser contracting with a bona fide business or hiring entity to provide stand-alone in-store inventory and product placement labor or services on behalf of retailers and brands in the consumer-packaged goods industry. The exemption is intended for individuals providing labor or services for remuneration, but are considered independent contractors rather than employees. The exemption is based on a multifactor test, which considers factors such as the worker's level of control, the type of work performed, and the worker's customary occupation or business. This exemption aims to clarify the classification of workers in the consumer-packaged goods industry, and to provide greater certainty for businesses and workers alike.

Bill journey

✓IntroducedComplete

2In CommitteeCurrent

3First Chamber FloorPending

4Second ChamberPending

5GovernorPending

6ChapteredPending

Last action: From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. (2026-02-02)Alert me

Author and sponsors

Asm. Heath FloraAuthor · California State Assembly

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Recent actions7 total · showing 5

Feb. 02, 2026	From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
Jan. 31, 2026	Died pursuant to Art. IV, Sec. 10(c) of the Constitution.
Mar. 17, 2025	Re-referred to Com. on L. & E.
Mar. 13, 2025	Referred to Com. on L. & E.
Mar. 13, 2025	From committee chair, with author's amendments: Amend, and re-refer to Com. on L. & E. Read second time and amended.

Full action history, 2 earlier actionsConnect Plus

Latest bill textAmended version, March 13, 2025 · 2,753 words

Amended IN Assembly March 13, 2025

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 816

Introduced by Assembly Member Flora

February 19, 2025

An act to amend Section ~~2776~~ 2778 of the Labor Code, relating to employment.

LEGISLATIVE COUNSEL'S DIGEST

AB 816, as amended, Flora. Employment: employees and independent ~~contractors.~~ contractors: merchandisers.

Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification
Existing law exempts certain occupations and business relationships from the application of the ABC test described above. Existing law, instead, provides that these exempt relationships are governed by the multifactor test previously adopted in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. These exemptions include professional services provided by graphic designers, fine artists, content contributors, and various others, subject to meeting specified conditions.
This bill would create an exemption for a merchandiser contracting with a bona fide business or hiring entity to provide stand-alone in-store inventory and product placement labor or services on behalf of retailers and brands in the consumer-packaged goods industry, as specified.
Existing law considers a person providing labor or services for remuneration, for purposes of the Labor Code and the Unemployment Insurance Code, and for the purposes of wage orders of the Industrial Welfare Commission, to be an employee rather than an independent contractor unless the hiring entity demonstrates that certain conditions are satisfied, as specified. Existing law exempts a bona fide business-to-business contracting relationship, as defined, from this presumption if specified conditions are met, including, among other things, that an individual acting as a sole proprietor contracts to provide services to another such business.
~~This bill would make nonsubstantive changes to the provisions that exempt business-to-business relationships from the presumption described above.~~

Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 2778 of the Labor Code is amended to read:

2778.

(a) Section 2775 and the holding in Dynamex do not apply to a contract for “professional services” as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:

(1) The individual maintains a business location, which may include the individual’s residence, that is separate from the hiring entity. Nothing in this paragraph prohibits an individual from choosing to perform services at the location of the hiring entity.

(2) If work is performed more than six months after the effective date of this section and the work is performed in a jurisdiction that requires the individual to have a business license or business tax registration, the individual has the required business license or business tax registration in order to provide the services under the contract, in addition to any required professional licenses or permits for the individual to practice in their profession.

(3) The individual has the ability to set or negotiate their own rates for the services performed.

(4) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individual’s own hours.

(5) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.

(6) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.

(b) For purposes of this section:

(1) An “individual” includes an individual providing services as a sole proprietor or other business entity.

(2) “Professional services” means services that meet any of the following:

(A) Marketing, provided that the contracted work is original and creative in character and the result of which depends primarily on the invention, imagination, or talent of the individual or work that is an essential part of or necessarily incident to any of the contracted work.

(B) Administrator of human resources, provided that the contracted work is predominantly intellectual and varied in character and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.

(i) A person regulated by the Attorney General under Article 2.6 (commencing with Section 17550) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.

(ii) An individual who is a seller of travel within the meaning of subdivision (a) of Section 17550.1 of the Business and Professions Code and who is exempt from the registration under subdivision (g) of Section 17550.20 of the Business and Professions Code.

(D) Graphic design.

(E) Grant writer.

(F) (i) Fine artist.

(ii) For the purposes of this subparagraph, “fine artist” means an individual who creates works of art to be appreciated primarily or solely for their imaginative, aesthetic, or intellectual content, including drawings, paintings, sculptures, mosaics, works of calligraphy, works of graphic art, crafts, or mixed media.

(G) Services provided by an enrolled agent who is licensed by the United States Department of the Treasury to practice before the Internal Revenue Service pursuant to Part 10 of Subtitle A of Title 31 of the Code of Federal Regulations.

(H) Payment processing agent through an independent sales organization.

(I) Services provided by any of the following:

(i) By a still photographer, photojournalist, videographer, or photo editor who works under a written contract that specifies the rate of pay and obligation to pay by a defined time, as long as the individual providing the services is not directly replacing an employee who performed the same work at the same volume for the hiring entity; the individual does not primarily perform the work at the hiring entity’s business location, notwithstanding paragraph (1) of subdivision (a); and the individual is not restricted from working for more than one hiring entity. This subclause is not applicable to a still photographer, photojournalist, videographer, or photo editor who works on motion pictures, which is inclusive of, but is not limited to, theatrical or commercial productions, broadcast news, television, and music videos. Nothing in this section restricts a still photographer, photojournalist, photo editor, or videographer from distributing, licensing, or selling their work product to another business, except as prohibited under copyright laws or workplace collective bargaining agreements.

(ii) To a digital content aggregator by a still photographer, photojournalist, videographer, or photo editor.

(iii) For the purposes of this subparagraph the following definitions apply:

(I) “Photo editor” means an individual who performs services ancillary to the creation of digital content, such as retouching, editing, and keywording.

(II) “Digital content aggregator” means a licensing intermediary that obtains a license or assignment of copyright from a still photographer, photojournalist, videographer, or photo editor for the purposes of distributing that copyright by way of sublicense or assignment, to the intermediary’s third-party end users.

(J) Services provided by a freelance writer, translator, editor, copy editor, illustrator, or newspaper cartoonist who works under a written contract that specifies the rate of pay, intellectual property rights, and obligation to pay by a defined time, as long as the individual providing the services is not directly replacing an employee who performed the same work at the same volume for the hiring entity; the individual does not primarily perform the work at the hiring entity’s business location, notwithstanding paragraph (1) of subdivision (a); and the individual is not restricted from working for more than one hiring entity.

(K) Services provided by an individual as a content contributor, advisor, producer, narrator, or cartographer for a journal, book, periodical, evaluation, other publication or educational, academic, or instructional work in any format or media, who works under a written contract that specifies the rate of pay, intellectual property rights and obligation to pay by a defined time, as long as the individual providing the services is not directly replacing an employee who performed the same work at the same volume for the hiring entity, the individual does not primarily perform the work at the hiring entity’s business location notwithstanding paragraph (1) of subdivision (a); and the individual is not restricted from working for more than one hiring entity.

(L) Services provided by a licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist provided that the individual:

(i) Sets their own rates, processes their own payments, and is paid directly by clients.

(ii) Sets their own hours of work and has sole discretion to decide the number of clients and which clients for whom they will provide services.

(iii) Has their own book of business and schedules their own appointments.

(iv) Maintains their own business license for the services offered to clients.

(v) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.

(vi) This subparagraph shall become inoperative, with respect to licensed manicurists, on January 1, 2025.

(M) A specialized performer hired by a performing arts company or organization to teach a master class for no more than one week. “Master class” means a specialized course for limited duration that is not regularly offered by the hiring entity and is taught by an expert in a recognized field of artistic endeavor who does not work for the hiring entity to teach on a regular basis.

(N) Services provided by an appraiser, as defined in Part 3 (commencing with Section 11300) of Division 4 of the Business and Professions Code.

(O) Registered professional foresters licensed pursuant to Article 3 (commencing with Section 750) of Chapter 2.5 of Division 1 of the Public Resources Code.

(P) A merchandiser contracting with a bona fide business or hiring entity to provide stand-alone in-store inventory and product placement labor or services on behalf of retailers and brands in the consumer-packaged goods industry, subject to meeting all of the following conditions:
(i) The individual voluntarily registers as a merchandiser with a business or hiring entity offering stand-alone in store inventory and product placement labor or services to retailers and brands in the consumer-packaged goods industry.
(ii) The merchandiser can freely negotiate or voluntarily accept the terms of remuneration in return for completion of the labor or services.
(iii) The labor or services are performed by the merchandiser without supervision, direction, or control of the business or hiring entity.
(iv) The business or hiring entity carries private occupational accident insurance for individuals registering as merchandisers.
(v) The business or hiring entity does not require the merchandiser to accept any specific contract for labor or services, undergo training, or provide specialized equipment or tools.
(vi) Outside of the contract for labor or services, the business or hiring entity does not restrict the merchandiser from engaging with or performing work through other businesses or companies.

(c) Section 2775 and the holding in Dynamex do not apply to the following, which are subject to the Business and Professions Code:

(1) A real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032 of the Business and Professions Code. If that section is not applicable, then this determination shall be governed as follows:

(A) For purposes of unemployment insurance by Section 650 of the Unemployment Insurance Code.

(B) For purposes of workers’ compensation by Section 3200 et seq.

(C) For all other purposes in the Labor Code by Borello. The statutorily imposed duties of a responsible broker under Section 10015.1 of the Business and Professions Code are not factors to be considered under the Borello test.

(2) A home inspector, as defined in Section 7195 of the Business and Professions Code, and subject to the provisions of Chapter 9.3 (commencing with Section 7195) of Division 3 of that code.

(3) A repossession agency licensed pursuant to Section 7500.2 of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by Section 7500.2 of the Business and Professions Code, if the repossession agency is free from the control and direction of the hiring person or entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

SECTION 1.Section 2776 of the Labor Code is amended to read:
2776.
~~Section 2775 and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:~~
(a)If an individual acting as a sole proprietor, or a business entity formed as a partnership, limited liability company, limited liability partnership, or corporation (“business service provider”) contracts to provide services to another such business or to a public agency or quasi-public corporation (“contracting business”), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are met:
(1)The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
(2)The business service provider is providing services directly to the contracting business rather than to customers of the contracting business. This subparagraph does not apply if the business service provider’s employees are solely performing the services under the contract under the name of the business service provider and the business service provider regularly contracts with other businesses.
(3)The contract with the business service provider is in writing and specifies the payment amount, including any applicable rate of pay, for services to be performed, as well as the due date of payment for the services.
(4)If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.
(5)The business service provider maintains a business location, which may include the business service provider’s residence, that is separate from the business or work location of the contracting business.
~~(6)The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.~~
~~(7)The business service provider can contract with other businesses to provide the same or similar services and maintain a clientele without restrictions from the hiring entity.~~
~~(8)The business service provider advertises and holds itself out to the public as available to provide the same or similar services.~~
(9)Consistent with the nature of the work, the business service provider provides its own tools, vehicles, and equipment to perform the services, not including any proprietary materials that may be necessary to perform the services under the contract.
~~(10)The business service provider can negotiate its own rates.~~
~~(11)Consistent with the nature of the work, the business service provider can set its own hours and location of work.~~
(12)The business service provider is not performing the type of work for which a license from the Contractors’ State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.
(b)When two bona fide businesses are contracting with each other under the conditions set forth in subdivision (a), the determination of whether an individual worker who is not acting as a sole proprietor or formed as a business entity, is an employee or independent contractor of the business service provider or contracting business is governed by Section 2775.
~~(c)This section does not alter or supersede any existing rights under Section 2810.3.~~

Text of AB 816 as amended, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions