Are Engineers Exempt From California’s AB-5 Law?

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Are Engineers Exempt From California's AB-5 Law?

 

When AB-5 was enacted on Jan. 1st, the law which added restrictions on how workers can be identified as independent contractors – Or 1099s – had additional language which exempt engineers. But does that mean ALL engineers are exempted?

With the AB-5implementation, all 1099 workers must meet the ABC Test criteria, with the exception of a few professions. Under Section 2, Subdivision (b) of the AB-5 Text, the following is included in the ABC Test Exemption:

“(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.”

The preceding phrase “holds an active license from the State of California” means those who have been qualified by the Board for Professional Engineers, Land Surveyors, and Geologists under the Department of Consumer Affairs and are identified as Professional Engineers or P.E.s for short.

According to the National Society of Professional Engineers (NSPE), engineers who typically hold P.E. licenses include:

  • The following disciplines: Agricultural, Chemical, Civil, Control System, Electrical, Fire Protection, Industrial, Mechanical, Metallurgical, Nuclear, Petroleum, Traffic.
  • Those who are authorized to prepare, sign and seal, and submit engineering plans and drawings to a public authority for approval, or seal engineering work for public and private clients.
  • Work in a federal, state or municipal agency
  • Work as a government contractor
  • Those who teach engineering

It’s to be noted that being exempt from the ABC Test does not automatically qualify a licensed engineer to work as a 1099. It means they default to the “Borello Test” which was the precedent standard used before the application of AB-5. The Borello Test looks into multiple circumstances such as the worker’s ability to control the direction of his/her work, how the work was performed, how to acquire payment for the work done and other factors, to determine whether or not a worker can qualify as a 1099. This standard is less stringent since it looks into numerous factors, whereas the ABC Test’s 3-prong criteria must be met to work as a 1099.

To avoid confusion…

Assess if the engineer’s work and practice meet the standards of the Borello Test.

  • If not, engage with the engineer as a W-2 employee.
  • If the work to be performed is short-termed or does not necessitate for the engineer to be on-boarded as an employee, then consider bringing them in as a W-2 contract worker through an employee leasing program.

Utilizing an Employee Leasing Programs allows your company the flexibility of engaging with engineers on a contractual basis while still staying in compliance with state employment laws. SoloPoint Solutions has helped dozens of companies to continue working with contract engineers and still meet the strict standards of the AB-5 law by classifying them as W-2s and taking on the employer responsibilities.

To learn more about our employee leasing program, contact us today:

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