With remote work for adults and online distance learning for students here to stay, it is natural for parents with already demanding workloads to seek the help of others to keep their children busy and focused on learning during an already difficult situation. Many parents are searching for options, including engaging the services of at-home tutors and teachers to help supervise distance learning or even participate in “learning pods” with a group of students. But with California’s use of the “ABC” test and the enactment of AB 5, which is intended to give workplace protections and benefits to more California workers, these types of arrangements bring their own set of challenges and concerns for parents.
California’s AB 5, which became effective Jan. 1, 2020, codifies a 2018 California Supreme Court decision that used a three-prong “ABC” test to determine whether workers were properly classified as independent contractors, rather than employees. Due in large part to lobbying efforts, AB 5 contains a number of exemptions (if an exemption applies, a more flexible, multi-factor test will govern contractor status), but if the parties’ relationship does not qualify for one of these exemptions, the hiring party must satisfy each of the following elements of the ABC Test to classify the worker as an independent contractor:
(A) the worker must be free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for performance of the work and in fact;
(B) the worker must perform work that is outside the usual course of the hiring entity’s business; and
(C) the worker must be customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Notably, AB 5 does not exempt teachers and tutors hired by parents – an issue that has recently gained attention in light of the pandemic’s impact on school openings. Although some are calling for Gov. Newsom to suspend the application of AB 5 to at-home teachers and tutors, he has yet to do so. This means parents should proceed with caution and take into consideration the factors of the ABC Test when they are deciding how to classify and pay their child’s tutor.
Parents should bear in mind that a teacher or tutor may qualify as an independent contractor if he or she is completely free from the direction and control of the hiring party (e.g., the parents), including, for example, in developing and teaching their own curriculum, setting their own teaching schedule, and even determining where the learning takes place.
To satisfy prong C of the ABC Test, parents may want to consider the following:
- Engage the services of a tutor who already has their own independently established business (meaning they are in the business of providing tutoring services to others and have formed their own legally recognized business to do so), and the parents should not use the tutor to perform any work outside of that engagement (such as performing household chores or providing childcare).
- If it turns out the tutor is providing service more akin to domestic help or a child care provider, the parent may consider classifying the worker as an employee rather than an independent contractor. This means the parent will also be responsible for complying with California’s wage and hour laws and paying payroll taxes, workers’ compensation insurance, and providing a host of other employee-related benefits to the worker.
As the consequences for contractor misclassification in California are severe, parents should review and comply with all legal requirements before engaging a tutor or teacher for their child’s learning.