6 ms·

From the bill: > a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring

by bko 7y ago

From the bill: > a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation or business. Under these conditions, what position would qualify as a contractor? The first clause > free from control and direction of the hiring entity in connection with the performance of the work seems awfully broad. If I contract someone to clean my house, I would hope I have some control and direction of the person in connection to them cleaning my house. Or am I reading this wrong. The second clause > the person performs work that is outside the usual course of the hiring entity’s business means I can't contract out work that I normally do? So if I'm a cleaner, I can't contract out other cleaners if I'm swamped. The third clause > person is customarily engaged in an independently established trade, occupation or business I don't really know what that means Can someone shed some light on the text? [0] https://legiscan.com/CA/text/AB5/2019 https://legiscan.com/CA/text/AB5/2019

mo1ok 7y ago
I think it means that contracting can't be a part of a company core business model - as is in the case for uber, lyft, or cleaning services. Examples of a contractor here would be: hiring a third-party graphic designer for a few months while you ramp up hiring at a startup.
- graeme 7y ago
  The law says AND. You need to comply with all three conditions. So, you would also need to be sure that they were: >free from control and direction of the hiring entity in connection with the performance of the work And: >person is customarily engaged in an independently established trade, occupation or business
- deleted 7y ago
  [deleted]
ajsnigrutin 7y ago
In my country, if you earn 80%+ of your income as a contractor from a single company (with some limitations), you're labeled as dependant contractor, and special rules apply (eg: they can't just break a contract, they must give notice first, etc).
- gringoDan 7y ago
  This is a good distinction that more countries should adopt. As usual, technology and business has changed faster than the law. Seems like the employee/IC dichotomy is too blunt of a distinction nowadays.
- cmrdporcupine 7y ago
  This sounds like a good classification, and I would hope along with it would come corresponding taxation policies. Here in Canada there are many "small businesses" which are incorporated single persons getting paying the miniscule corporate tax rate, with various tricks to avoid income tax (paying spouses, drawing dividends, investing in 'corporate' assets which aren't, etc.) while drawing their income primarily from a single source (often a corporation or charity they are personally associated with.) When the gov't made noises about small business tax reform people screamed bloody murder and they had to climb down. Which only shows you how pervasive this kind of 'contracting' as tax avoidance actually is.
  - reallydontask 7y ago
    Similar thing seems to be going on here in the UK. I must admit that I don't know enough of both situations to say much. There seems to be quite a bit of vitriol online about the rule changes in the UK though. I do remember reading the rules when I became a contractor a few years back and thinking: Ok, so I'm inside IR35, going to use an umbrella company as it's simpler. Was told that i was a fool and contract was outside IR35. As far as I could tell, nobody meet, or indeed, could meet the substitution clause.
m0llusk 7y ago
This problem of legally differentiating between employees and contractors has been around for a while and relates to multiple factors so it is informative to look at this in contextual terms. This arrangement has become known as the "ABC Test". There is a good summary of what it means at The Balance Small Business: https://www.thebalancesmb.com/what-is-the-abc-test-for-independent-contractors-4586615 https://www.thebalancesmb.com/what-is-the-abc-test-for-indep... and discussion of adoption of this test by the California Supreme Court at the California Public Agency Blog: https://www.calpublicagencylaboremploymentblog.com/wage-and-hour-2/california-supreme-court-adopts-new-abc-test-for-classification-of-independent-contractors-potential-risk-and-impact-on-public-agencies/ https://www.calpublicagencylaboremploymentblog.com/wage-and-.... To attempt to summarize in a way that answers your questions: First do you know how to do the work and use your own expertise to adapt to circumstances or do you follow specific direction, training, and escalation procedures as dictated by management? If you are following a script as trained and have someone overseeing you as you work then you are an employee. If you know what to do and get only summary instructions then you are likely a contractor. Second, if you are hired by a cleaning company to extend their cleaning capacity using their methods and equipment then you are likely an employee, but if you are hired by a software company to sweep their floors whenever they get really dirty then you are probably a contractor. Finally, if you do cleaning on your own for various clients and are hired to do cleaning then you are likely a contractor, but if you clean for one client by their instruction and with their oversight and support then you are probably an employee. Note that each of these criteria has substantial wiggle room and the idea is they all work together to support a decision one way or the other.
- rem7 7y ago
  From your second example... that sounds like it’s going to affect construction workers too... a lot of contractors just hire construction workers day to day to expand their workforce. Would that become illegal or is it different in construction?
  - nradov 7y ago
    A lot of what contractors do in hiring day labor and paying them cash under the table is already illegal. I don't think this bill would change that.
deleted 7y ago
[deleted]
GarrisonPrime 7y ago
As far as controlling and directing the performance of work, that means how they do the work itself. Requiring them to use certain tools, resources, or techniques, for instance. You can ask them to dust, but can’t order them to dust a certain way. Of course you can make requests - don’t use cleaning product XYZ because I’m allergic, don’t dust the China because it’s too fragile, etc. But I suppose at some point it could be argued that too many such requests cross over into essentially supervising how they dust. I think you’re right about contracting out for help. If you have employees already, and then you expect another person to join in and operate just as an employee would, why wouldn’t they also be considered an employee? I’m sure there could be some loopholes however.
el_cujo 7y ago
I think an example would be for companies like Google who hire a lot of contractors from hiring agencies who do work at Google, but these people don't technically work FOR Google and therefore don't get the good Google salary or good Google benefits. I guess that is counter to Uber who hires their own people and basically contracts them out to themselves? I don't know if that means the easy loophole for Uber and Lyft is just to now hire all drivers from a separate company and then call them contractors.
wheelerwj 7y ago
i am not a lawyer but ive been a hiring manager for a while so ill give you my understanding. > free from control and direction of the hiring entity in connection with the performance of the work An independent contractor should be free to work when, where, and how they want. IE, you can't demand a contractor show up from 9-5 at your office, wearing a company uniform, and following employee policy. > the person performs work that is outside the usual course of the hiring entity’s business for example, a company that sells software, might hire a contractor to update their online advertising. The company doesn't sell online advertising or have any expertise in it, and they don't have a need for a full time position for online advertiser. this one is going to be interesting for uber and lyft. right now, they identify and brand themselves as a ride sharing company. So rides ARE their business model. They might, for example, be able to pivot into a software company that licenses their ride-hailing software to drivers (who are license the software to help run their own independent businesses), then maybe they can get around this after some work. but right now its appears that drivers work for uber and lyft to deliver services to Uber/Lyft customers. > person is customarily engaged in an independently established trade, occupation or business this is the most straight forward of them all. If an IC provides their services, the same service, to more than one company, that's a good indication that they are running their own business and not working as an employee for another. Here, Uber and Lyft actually benefit from each other because a lot of drivers drive for both Uber and Lyft. Thats why we've seen both uber and lyft drop their exclusivity arrangements with drivers in recent years.

by bko 7y ago

mo1ok 7y ago

I think it means that contracting can't be a part of a company core business model - as is in the case for uber, lyft, or cleaning services. Examples of a contractor here would be: hiring a third-party graphic designer for a few months while you ramp up hiring at a startup.

graeme 7y ago
The law says AND. You need to comply with all three conditions. So, you would also need to be sure that they were: >free from control and direction of the hiring entity in connection with the performance of the work And: >person is customarily engaged in an independently established trade, occupation or business
deleted 7y ago
[deleted]

ajsnigrutin 7y ago

In my country, if you earn 80%+ of your income as a contractor from a single company (with some limitations), you're labeled as dependant contractor, and special rules apply (eg: they can't just break a contract, they must give notice first, etc).

gringoDan 7y ago
This is a good distinction that more countries should adopt. As usual, technology and business has changed faster than the law. Seems like the employee/IC dichotomy is too blunt of a distinction nowadays.
cmrdporcupine 7y ago
This sounds like a good classification, and I would hope along with it would come corresponding taxation policies. Here in Canada there are many "small businesses" which are incorporated single persons getting paying the miniscule corporate tax rate, with various tricks to avoid income tax (paying spouses, drawing dividends, investing in 'corporate' assets which aren't, etc.) while drawing their income primarily from a single source (often a corporation or charity they are personally associated with.) When the gov't made noises about small business tax reform people screamed bloody murder and they had to climb down. Which only shows you how pervasive this kind of 'contracting' as tax avoidance actually is.
- reallydontask 7y ago
  Similar thing seems to be going on here in the UK. I must admit that I don't know enough of both situations to say much. There seems to be quite a bit of vitriol online about the rule changes in the UK though. I do remember reading the rules when I became a contractor a few years back and thinking: Ok, so I'm inside IR35, going to use an umbrella company as it's simpler. Was told that i was a fool and contract was outside IR35. As far as I could tell, nobody meet, or indeed, could meet the substitution clause.

m0llusk 7y ago

This problem of legally differentiating between employees and contractors has been around for a while and relates to multiple factors so it is informative to look at this in contextual terms. This arrangement has become known as the "ABC Test". There is a good summary of what it means at The Balance Small Business: https://www.thebalancesmb.com/what-is-the-abc-test-for-independent-contractors-4586615 https://www.thebalancesmb.com/what-is-the-abc-test-for-indep... and discussion of adoption of this test by the California Supreme Court at the California Public Agency Blog: https://www.calpublicagencylaboremploymentblog.com/wage-and-hour-2/california-supreme-court-adopts-new-abc-test-for-classification-of-independent-contractors-potential-risk-and-impact-on-public-agencies/ https://www.calpublicagencylaboremploymentblog.com/wage-and-.... To attempt to summarize in a way that answers your questions: First do you know how to do the work and use your own expertise to adapt to circumstances or do you follow specific direction, training, and escalation procedures as dictated by management? If you are following a script as trained and have someone overseeing you as you work then you are an employee. If you know what to do and get only summary instructions then you are likely a contractor. Second, if you are hired by a cleaning company to extend their cleaning capacity using their methods and equipment then you are likely an employee, but if you are hired by a software company to sweep their floors whenever they get really dirty then you are probably a contractor. Finally, if you do cleaning on your own for various clients and are hired to do cleaning then you are likely a contractor, but if you clean for one client by their instruction and with their oversight and support then you are probably an employee. Note that each of these criteria has substantial wiggle room and the idea is they all work together to support a decision one way or the other.

rem7 7y ago
From your second example... that sounds like it’s going to affect construction workers too... a lot of contractors just hire construction workers day to day to expand their workforce. Would that become illegal or is it different in construction?
- nradov 7y ago
  A lot of what contractors do in hiring day labor and paying them cash under the table is already illegal. I don't think this bill would change that.

deleted 7y ago

[deleted]

GarrisonPrime 7y ago

As far as controlling and directing the performance of work, that means how they do the work itself. Requiring them to use certain tools, resources, or techniques, for instance. You can ask them to dust, but can’t order them to dust a certain way. Of course you can make requests - don’t use cleaning product XYZ because I’m allergic, don’t dust the China because it’s too fragile, etc. But I suppose at some point it could be argued that too many such requests cross over into essentially supervising how they dust. I think you’re right about contracting out for help. If you have employees already, and then you expect another person to join in and operate just as an employee would, why wouldn’t they also be considered an employee? I’m sure there could be some loopholes however.

el_cujo 7y ago

I think an example would be for companies like Google who hire a lot of contractors from hiring agencies who do work at Google, but these people don't technically work FOR Google and therefore don't get the good Google salary or good Google benefits. I guess that is counter to Uber who hires their own people and basically contracts them out to themselves? I don't know if that means the easy loophole for Uber and Lyft is just to now hire all drivers from a separate company and then call them contractors.

wheelerwj 7y ago

i am not a lawyer but ive been a hiring manager for a while so ill give you my understanding. > free from control and direction of the hiring entity in connection with the performance of the work An independent contractor should be free to work when, where, and how they want. IE, you can't demand a contractor show up from 9-5 at your office, wearing a company uniform, and following employee policy. > the person performs work that is outside the usual course of the hiring entity’s business for example, a company that sells software, might hire a contractor to update their online advertising. The company doesn't sell online advertising or have any expertise in it, and they don't have a need for a full time position for online advertiser. this one is going to be interesting for uber and lyft. right now, they identify and brand themselves as a ride sharing company. So rides ARE their business model. They might, for example, be able to pivot into a software company that licenses their ride-hailing software to drivers (who are license the software to help run their own independent businesses), then maybe they can get around this after some work. but right now its appears that drivers work for uber and lyft to deliver services to Uber/Lyft customers. > person is customarily engaged in an independently established trade, occupation or business this is the most straight forward of them all. If an IC provides their services, the same service, to more than one company, that's a good indication that they are running their own business and not working as an employee for another. Here, Uber and Lyft actually benefit from each other because a lot of drivers drive for both Uber and Lyft. Thats why we've seen both uber and lyft drop their exclusivity arrangements with drivers in recent years.