An act to amend Section 2776 2778 of the Labor Code, relating to employment.
AB 816 would revise California’s worker-classification rules by adding a new exemption from the ABC test for certain merchandisers in the consumer-packaged goods industry. Under the bill, a merchandiser who contracts with a bona fide business or hiring entity to perform stand-alone in-store inventory and product placement work could be treated under the Borello test rather than presumed to be an employee, if specified conditions are met. Those conditions include voluntary registration, the ability to negotiate or accept pay terms, work performed without supervision or control, the hiring entity carrying private occupational accident insurance, no requirement to accept specific contracts or training, no requirement to provide specialized tools, and no restriction on working for other businesses outside the contract.
The bill also makes nonsubstantive changes to the existing business-to-business contracting exemption in Labor Code Section 2776. That section already allows certain bona fide business-to-business relationships to be evaluated under Borello instead of the ABC test when a detailed set of independence criteria is satisfied. AB 816 does not eliminate the ABC test generally; rather, it adds another category of workers and clarifies related statutory language governing exempt contracting relationships.
If enacted, the bill would affect Labor Code Sections 2776 and 2778 and expand the list of occupations and contracting relationships exempt from the Dynamex/ABC framework. The practical effect would be to make it easier for companies in merchandising, retail support, and consumer-packaged goods field services to classify qualifying merchandisers as independent contractors, while still imposing conditions intended to preserve contractor independence and some worker protections such as accident insurance. The bill would also continue to leave other covered occupations and business-to-business arrangements subject to Borello where the statutory criteria are met.
The available legislative record shows little public controversy in the materials provided: there are no committee transcripts or recorded votes, and the bill’s last action was being filed with the Chief Clerk pursuant to Joint Rule 56. Based on the text alone, the bill appears to be framed as a targeted industry exemption rather than a broad rewrite of employment law. The general sentiment suggested by the bill language is supportive of flexibility for independent merchandising work, with safeguards added to distinguish contractors from supervised employees.
The main point of contention likely concerns worker misclassification. Supporters would likely view the bill as recognizing a specialized, on-the-ground merchandising role that does not fit neatly within the ABC test, while critics may argue that creating another exemption weakens employee protections and could allow businesses to shift labor costs and liabilities onto workers. The insurance requirement and limits on supervision suggest an attempt to address those concerns, but the core debate remains whether these merchandisers are truly independent contractors or functionally part of the hiring entity’s workforce.
AB 816 would amend Labor Code Sections 2776 and 2778 to add merchandisers in the consumer-packaged goods industry to the list of occupations exempt from the ABC test and evaluated under Borello when statutory conditions are met. It would also make technical, nonsubstantive changes to the business-to-business exemption, leaving the broader employee-versus-independent-contractor framework in place but expanding the categories that can qualify for alternative treatment. The bill would primarily affect merchandisers, retailers, brands, consumer-packaged goods companies, and other hiring entities that rely on stand-alone in-store inventory and product placement labor.
The bill’s text and procedural history suggest a generally favorable or at least noncontroversial posture in the materials provided, but there is no committee testimony or vote record to confirm broader stakeholder views. The measure appears designed to provide a tailored exemption for a specific industry practice while retaining conditions meant to preserve contractor independence. Overall, the tone is pro-flexibility for qualifying merchandisers, with an effort to balance that flexibility with limited worker protections.
The central issue is worker classification: whether merchandisers performing in-store inventory and product placement work should be treated as independent contractors under Borello or as employees under the ABC test. Supporters would likely argue the work is discrete, flexible, and commonly performed outside a traditional employment relationship, while opponents would likely contend that another exemption increases the risk of misclassification and erosion of wage, hour, and benefit protections. The bill’s requirements for insurance, voluntary registration, and freedom from control appear aimed at addressing those concerns, but those same provisions may also be viewed as insufficient safeguards by critics.