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AB 816

Employment: employees and independent contractors: merchandisers.

2025-2026 Regular Session Introduced by Heath Flora

AB 816 would carve out stand-alone in-store merchandisers for retailers/CPG brands from the ABC test, applying Borello and altering worker status and employer obligations.

Re-referred to Com. on L. & E.
#employment #employeesandindependentcontractors #merchandisers
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Bill Summary · AB 816

AB 816 — Employment: employees and independent contractors: merchandisers

Status: Re‑referred to Assembly Committee on Labor & Employment (3/17/2025)
Introduced: February 19, 2025 (Author: Flora)

Purpose / Intent

AB 816 would add a specific exemption to California’s worker‑classification rules so that certain merchandisers — persons who contract to perform stand‑alone in‑store inventory and product placement services for retailers and consumer‑packaged goods (CPG) brands — are not automatically classified under the “ABC” independent contractor test (Dynamex/AB 5). Instead, those relationships would be evaluated under the older multifactor Borello test (S. G. Borello & Sons v. DIR).

Key provisions

  • Amends Labor Code Section 2778 to:

    • Preserve an existing carve‑out that treats specified “professional services” as governed by Borello when six listed factors are satisfied (Section 2778(a): business location separate from hiring entity; required business license if applicable after six months; ability to set or negotiate rates; ability to set hours outside of deadlines and reasonable business hours; customarily engaged in same type of work for others; regular exercise of discretion and independent judgment).
    • Add a new exemption (as described in legislative digest): a merchandiser who contracts with a bona fide business or hiring entity to provide stand‑alone in‑store inventory and product‑placement labor or services on behalf of retailers and brands in the CPG industry would fall within the exemption and be evaluated under Borello rather than the ABC test.
    • Make nonsubstantive edits to existing bona fide business‑to‑business exemption language (no substantive change intended to the core B2B exemption criteria).

  • Continues to leave enforcement authority with the Labor Commissioner and retains the ABC test as the default rule for most worker relationships unless an exemption applies.

Who would be affected

  • Primary: Third‑party merchandisers and agencies that supply in‑store inventory, restocking, shelf placement, promotional placement, and related stand‑alone services for retailers and CPG brands.
  • Secondary: Retailers, brand managers, distributors, and contracting firms that hire or contract with merchandisers.
  • Government: Labor enforcement agencies (Labor Commissioner) would continue to oversee classifications; unemployment insurance and wage orders remain affected by classification outcomes.

Potential impacts

  • Classification shift: Applying Borello rather than the ABC test typically makes it easier for workers to be treated as independent contractors in some cases, potentially reducing employers’ obligations for payroll taxes, unemployment insurance, workers’ compensation, and wage/hour protections.
  • Business operations: Retailers and brands that rely on third‑party merchandisers could see more contractual flexibility but also greater risk if Borello analysis later determines employment exists.
  • Worker protections: Some merchandisers might lose wage‑order protections and benefits tied to employee status depending on Borello findings.

Procedural history / next steps

  • Introduced 2/19/2025. Referred to Assembly Committee on Labor & Employment (3/13/2025); amended and re‑referred to that committee (3/13/2025 and 3/17/2025). Committee hearings are the next expected step.

Note: AB 816 is pending legislation; the exemption described would take effect only if the bill is enacted.

Compiled from official sources — confirm details with the bill’s official record.

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