A dozen companies of the myriads that provide field inspection and loss control services to the California insurance industry are pooling their resources to lobby the California legislature this year for an exemption from AB 5’s ABC test for differentiating between employees and independent contractors. These companies are mostly little guys who provide critical inspection services for the industry.
The businesses, which act as a middleman between the carriers and the field service inspectors, say the model is dependent on the use of independent contractors and likely wouldn’t survive a move to an employment-based model.
Joining together as the Field Services Alliance of California (FSAC), the dozen companies all provide various field inspection services for commercial carriers. Still, alliance leaders say they are not the only vendors in the insurance services sector reliant on independent contractors.
“All of the members of the alliance are from the insurance inspection industry,” says Jerry Berg, who owns the Calabasas based inspection business Contour-Info. “We haven’t really reached out to the other types of companies out there that do field services like claims adjusting, loss control, and safety inspections. Typically, insurance companies subcontract that out to specialty companies like mine, and traditionally the field staff, the insurance inspectors, are independent contractors.”
He adds they are hoping to add additional members as word of the Alliance gets out.
Berg says the businesses cover broad geographic areas and have preexisting agreements with inspectors in different regions to handle the requests that come for an inspection in their area. “My company and others like mine are pretty much zip code based,” says Berg. “So, an inspector will handle inspections that come into a specific zip code.”
He says independent inspectors that are looking to do this type of work full time will contract with multiple vendors to ensure they have enough inspections each day. Other contractors, Berg says, are often semi-retired individuals who and are doing inspections to keep busy and supplement their income or are stay-at-home moms and dads who can perform inspections while the kids are at school and then write up the reports at night.
He says inspectors are responsible for doing the inspections and producing reports that meet quality standards but otherwise are operating on their own.
“We really don’t have any control over the inspectors’ daily activities whatsoever, which is a hallmark of an independent contractor. In fact, it’s prong A of the ABC test,” notes Berg. “Then you come to B, and it says that if the inspector is doing work similar to that of the business, then they must be employees. Well, now we may be in conflict with A.”
The lobbying alliance retained John Norwood of Norwood Associates to represent their interests in Sacramento and to pursue an exemption. Norwood negotiated the exclusion for insurance brokers that was included in AB 5. The legislation also excluded physicians and surgeons, dentists, podiatrists, psychologists, lawyers, architects, engineers, private investigators, and accountants. Berg is hopeful that insurance field services will be added to the list, but in the meantime says he is taking steps to be in compliance and still keep the doors open.p