Worker classification: employees and independent contractors: licensed manicurists: commercial fishers.

The Committee on Labor and Employment advances a focused adjustment to worker classification by extending two narrow exemptions from the ABC framework: one for licensed manicurists and another for commercial fishers on American vessels, while preserving Borello as the governing standard for these exemptions. The bill extends the inoperative date for the licensed manicurist exemption to January 1, 2029 and extends the exemption for commercial fishers to January 1, 2031, subject to the exemptions continuing to be evaluated under the Borello multifactor test rather than the ABC test.

For licensed manicurists, the exemption applies to individuals who maintain a separate business location, hold any required business licenses or registrations for jurisdictions that require them after six months, and have the ability to set or negotiate rates, determine hours, and manage a book of business. If services are provided at the hiring entity’s location, the worker must issue a Form 1099 to the salon or business owner from whom they rent space. The bill also requires the Employment Development Department and the Division of Labor Standards Enforcement to report to the Legislature by June 1, 2026 on the annual number of misclassification allegations or other specified violations involving licensed manicurists since January 1, 2020, including the number of investigations, workers impacted, and enforcement actions initiated or outcomes. The manicurist exemption would become inoperative on January 1, 2029.

Regarding commercial fishers, the exemption for those working on an American vessel continues to apply and is subject to Borello for status determinations, with eligibility for unemployment insurance maintained under applicable rules. The bill directs an annual report to the Legislature on the use of unemployment insurance in the commercial fishing industry, shifting the reporting date from March 1 to June 30, and extending the inoperative date for this provision to January 1, 2031 unless extended by the Legislature. The report describes counts of unemployment insurance claims and related outcomes, consistent with existing reporting requirements.

Together, the changes preserve existing enforcement roles for the Labor Commissioner and the Division of Labor Standards Enforcement, while adding sunset-like milestones and reporting obligations intended to track misclassification activity and administrative outcomes. The proposal situates these exemptions within the Borello framework rather than the ABC test and situates its oversight within the broader context of labor classification policy, with a clear timeline for extension and renewal through 2029 and 2031 and targeted data collection to inform legislative review.