A contractor wants to hire a specialty consultant for a one-time project. Under AB5, which scenario would MOST LIKELY support independent contractor classification?
Correct Answer
C) The consultant provides their own specialized equipment and has other clients
Providing their own specialized equipment and having other clients supports meeting all three prongs of the ABC test: freedom from control (A), work outside usual course of business (B), and independently established business (C).
Why This Is the Correct Answer
This scenario satisfies all three prongs of AB5's ABC test. Providing their own specialized equipment supports Prong A (free from control — they use their own tools, not the contractor's). The specialty nature of the work distinguishes it from the contractor's usual course of business, supporting Prong B. Having multiple other clients demonstrates an independently established business, satisfying Prong C. All three prongs are met.
Why the Other Options Are Wrong
Option A: The consultant works exclusively for the contractor for 6 months
Working exclusively for one contractor for 6 months directly contradicts Prong C, which requires the worker to be 'customarily engaged in an independently established trade.' Exclusive, extended engagement with a single client strongly indicates an employment relationship, not an independent business.
Option B: The consultant performs the same work as the contractor's regular employees
Performing the same work as the contractor's regular employees fails Prong B, which requires work 'outside the usual course of the hiring entity's business.' If regular employees do the same work, the consultant is performing core business functions — a hallmark of employment.
Option D: The consultant works on-site using the contractor's tools and supervision
Working on-site using the contractor's tools and supervision fails Prong A (not free from control) and undermines Prong C (not independently established). Use of the hiring party's tools and direct supervision are classic indicators of employment under both common law and AB5.
Memory Technique
For independent contractor status under AB5, think of the 'three owns': Own control (Prong A), Own business type (Prong B), Own established trade (Prong C). The scenario with their own equipment and their own clients hits all three 'owns.'
More California Questions
A contractor is bidding on a public works project in Los Angeles County with a contract value of $2,000,000. The prevailing wage determination shows carpenter wages at $45.50 per hour. What additional amount must be paid for health and welfare benefits?
A construction company has 15 employees working on a project. One employee suffers a work-related injury. Under California law, what is the primary difference between Cal/OSHA and federal OSHA jurisdiction?
A contractor employs 8 workers and pays total wages of $480,000 annually. If the Unemployment Insurance (UI) tax rate is 3.4% on the first $7,000 of each employee's wages, what is the total annual UI tax owed?
Under Cal/OSHA regulations, what is required when a construction site has a trench excavation deeper than 5 feet?
A public works project requires certified payroll records. The prevailing wage for an electrician is $52.75 per hour with $18.50 in fringe benefits. If an electrician works 8 hours, what is the total prevailing wage obligation?
On a prevailing wage project, a carpenter's regular rate is $28/hour, but the prevailing wage is $35/hour with $8/hour in benefits. What must the contractor pay if the carpenter already receives $6/hour in benefits?
A California contractor has quarterly payroll of $85,000. What is the State Disability Insurance (SDI) withholding amount if the current SDI rate is 0.9% and the wage base limit is $153,164 annually?
Under California law, which statement about business entity liability is CORRECT?
XYZ Contracting LLC has 8 employees in California. An employee is injured on the job and requires medical treatment costing $15,000. The company has no workers' compensation insurance. What is XYZ's potential liability?
A general contractor subcontracts electrical work to an LLC. The electrician works exclusively for this contractor, uses the contractor's materials, and follows the contractor's daily schedule. Under AB5, this relationship is likely:
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
A general contractor subcontracts electrical work on a public project with a prevailing wage requirement of $48.25/hour plus $19.75 benefits. The electrician works 42 hours. If the contractor pays $50.00/hour straight time and provides $15.00/hour in benefits, what is the total amount owed to comply with prevailing wage?
Next Question
An employee earning $4,200 monthly reports a work-related injury. What percentage of their average weekly wage will they receive in temporary disability benefits under California workers' compensation?