What Happened?

As a reminder for employers in California, Assembly Bill 1514 extends two existing worker-classification exemptions from the three-part test commonly called the ABC test, which has been in effect since January 1, 2026.

Overview

California generally uses the ABC test to decide whether a worker is an employee or an independent contractor.

For certain professions, the law instead uses a more flexible multi-factor test (often called the Borello test).

Who is covered by the extensions:

• Licensed manicurists: the exemption is extended through January 1, 2029.

• Commercial fishers working on an American vessel: the exemption is extended through January 1, 2031.

Requirements to Use the Manicurist Exemption: To use the exemption, the arrangement must reflect real business independence. For example, the manicurist must:

• Set their own rates, process payments, and be paid directly by clients.
• Set their own hours, choose how many clients to take, and which clients to serve.
• Maintain their own book of business and schedule their own appointments.
• Maintain their own business license (where required).
• If working at the salon location, the manicurist issues a Form 1099 to the salon/business owner they rent space from.

Reporting requirements

• By June 1, 2026, the state must report to the Legislature the yearly number of misclassification allegations or other violations involving licensed manicurists dating back to January 1, 2020 (including investigations, workers impacted, and enforcement outcomes).

• For commercial fishing, the annual state report on unemployment insurance use is now due each June 30 (instead of March 1).

Why this matters

• The extensions mean that the ABC test will not apply to licensed manicurists or commercial fishers when all exemption requirements are met. Instead, their classification continues to be evaluated under the multi‑factor Borello test.

• The new reporting on manicurist-related allegations signals ongoing attention to misclassification enforcement in that sector.

Key Risks for Employers

• Misclassification exposure: If the exemption conditions are not met in practice (not just on paper), the ABC test may apply by default. This can result in workers being treated as employees under California law, increasing risk of wage-and-hour claims, penalties, and agency enforcement.

• Documentation gaps: Gaps in documentation that demonstrate the required independence, such as control over pricing, scheduling, client payments, business licensing, and the rental/1099 structure for on‑site salon work, can undermine the exemption and increase reclassification risk.

• Industry-specific oversight:

• Beauty businesses may face added scrutiny because state agencies must compile and report manicurist-related allegations and outcomes.

• Fishing operations should monitor unemployment insurance eligibility/reporting expectations tied to the commercial fishing exemption.

Bottom line: These extensions do not automatically allow independent‑contractor status. Employers and PEO teams must ensure the exemption requirements are met in day‑to‑day practice and supported with clear documentation, notably in industries subject to new reporting and oversight.

Source References

• California – AB 1514 – Worker Classification: Employees And Independent Contractors: Licensed Manicurists: Commercial Fishers

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