Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
It’s easier to leave a city in Texas than all of California. If they do someone else will fill the void. Taxi companies are small businesses too, yet people worrying how this law will affect small business don’t seem to have the same concern for what Uber did to cab companies or what Walmart coming to town did to small businesses. It feels like people are ok with small business being hurt by big rich companies, but being hurt via laws giving stronger protections to workers is an unacceptable line in the sand. Again I really don’t understand that.
Amazon didn’t pull out of NY due to regulations or taxes they pulled out due to the push back they were getting from far left AOC and far left community leaders who feared gentrification of the area they were moving into and the subsequent pushing out of long time residents that rapid rise in property values brings. They (AOC and others in her camp) were also angry about the massive tax breaks the city was giving Amazon. Amazon didn’t want to deal with the conflict and the protests so they said forget it we’ll go elsewhere.
I'm the OP. People have a right to talk about what they want. But I opened this thread to provide a forum to discuss what this means for small business, in addition to any other related things people wanted to discuss. If you have read other posts I'm one of the people noting the horrible Uber model of insulating itself from all risk, so if there's an accident, its on the driver, if the driver assaults someone, Uber isn't responsible for real (as opposed to faux) background checks, if the driver works for them, the pay (after depreciation and legal fees (car registration, for example)) is low or extremely low, and on and on. I don't use Uber, don't have their ap, and won't buy their stock. Same with Walmart.
Do I have enough credibility now to ask, can we now consider what's going to happen to authentic small businesses? It's not enough to pass the law, kill thousands of small businesses, and then revise the law. Once killed, those businesses are not coming back. How many long-existing small businesses returned to towns when Walmart left? Virtually none, because they did not move, they were killed.
Do I have enough credibility now to ask, can we now consider what's going to happen to authentic small businesses? It's not enough to pass the law, kill thousands of small businesses, and then revise the law. Once killed, those businesses are not coming back. How many long-existing small businesses returned to towns when Walmart left? Virtually none, because they did not move, they were killed.
There's a term for that..collateral damage. Heavily regulate thinking you are fixing things ends up eliminating the smaller entities. And guess who is left standing at the end ? The "big guy" you initially went after.
IMO if you want to change the definition of a contract worker then it should be done at the federal level via the Labor Department.
I agree that this will hurt small businesses the most. The requirement about not doing work central to the company's business is very subjective. I could see how overzealous application of this new law could mean all of a sudden you have a dozen new part time employees. This pushes more paperwork and reporting on to the small business, rather than the contractor.
Another reason why we're glad we left CA years ago. The rules should be the same as the IRS.
I'm the OP. People have a right to talk about what they want. But I opened this thread to provide a forum to discuss what this means for small business, in addition to any other related things people wanted to discuss. If you have read other posts I'm one of the people noting the horrible Uber model of insulating itself from all risk, so if there's an accident, its on the driver, if the driver assaults someone, Uber isn't responsible for real (as opposed to faux) background checks, if the driver works for them, the pay (after depreciation and legal fees (car registration, for example)) is low or extremely low, and on and on. I don't use Uber, don't have their ap, and won't buy their stock. Same with Walmart.
Do I have enough credibility now to ask, can we now consider what's going to happen to authentic small businesses? It's not enough to pass the law, kill thousands of small businesses, and then revise the law. Once killed, those businesses are not coming back. How many long-existing small businesses returned to towns when Walmart left? Virtually none, because they did not move, they were killed.
I guess I need ex’s one how this is going to kill small businesses. Give me a specific small business and what they contract for that they will no longer be able to. Not being snotty I’m really asking.
Well the bill is full of exemptions..enough to see they are targeting the ride sharing companies.
And they stated right at the top of the bill..expand the definition of an employee would expand the definition of a crime under the Labor Code.
I guess I need ex’s one how this is going to kill small businesses. Give me a specific small business and what they contract for that they will no longer be able to. Not being snotty I’m really asking.
Good question.
Remember, its a three-part test:
1)the worker is free from the company's control,
2)the worker is doing work that isn't central to the company's business, and
3)the worker has an independent business in that industry.
Here's an example:
A)Doris Johnson media (made up name) interviews local people about their jobs, edits the videos, and sells them to television stations. Johnson has no film editing skills. She shoots the video, and hires a sole-proprietor (sometimes David Whipple, sometimes Bridget Lawton, sometimes someone else, all sole-proprietor businesses) to edit the video. She selects which editor based on whether they can make the turn-around time she needs for a specific interview. So,
1)Johnson has neither the knowledge nor inclination to control the editor
3)None of editors want to be employees, as they have their own businesses.
BUT, 2)video editing is central to Doris Johnson's business. Thus, she fails the test, and now has to follow one of three routes:
X)Convince one or more of the other sole proprietors to become her employees, hire a bookkeeper and lawyer to assure she is now in compliance with employment law (payment of SSN, worker's comp, labor taxes, and whatever else), and probably raise prices to compensate (possibly pricing her out of the market).
Y)Learn video-editing, buy the software to edit video, spend time on video-editing and now reduce the time she has to find people to interview, prep for the interview, and conduct the interview--thus, oddly, lowering her profits just because she increased her skills (I know, its exactly the opposite of what a labor economist would predict if they think only about the return to skills (a focus of labor economics) instead of also considering the logic of comparative advantage (a focus of macroeconomics))
Z)Close her business
In option X, she may be unable to convince any of the editors she trusts to become employees. If not, she will have to search for unemployed video editors to hire. Sounds like a good outcome, but wait! Once she hires someone, her already marginal business (that added some local flavor to local news shows and thus paid major cultural dividends, which is what she loved) now incurs much higher costs, so high she may not be able to stay in business. So, there's a likely net loss in not only money income and taxes paid, but also in the cultural life of her community.
In options Y and Z, the video editors, who are other sole proprietors, lose her business and thus are driven closer to having to close their businesses.
So, that's an example. I could think of multiple other examples. But, let's keep it clear, and just stay with this one for now. Will passing this bill, while failing to exempt small businesses (where size is determined on the basis of something like gross income), produce an outcome we want?
Last edited by SocSciProf; 06-02-2019 at 08:39 AM..
Reason: Typos, clarification
1)the worker is free from the company's control,
2)the worker is doing work that isn't central to the company's business, and
3)the worker has an independent business in that industry.
Here's an example:
A)Doris Johnson media (made up name) interviews local people about their jobs, edits the videos, and sells them to television stations. Johnson has no film editing skills. She shoots the video, and hires a sole-proprietor (sometimes David Whipple, sometimes Bridget Lawton, sometimes someone else, all sole-proprietor businesses) to edit the video. She selects which editor based on whether they can make the turn-around time she needs for a specific interview. So,
1)Johnson has neither the knowledge nor inclination to control the editor
3)None of editors want to be employees, as they have their own businesses.
BUT, 2)video editing is central to Doris Johnson's business. Thus, she fails the test, and now has to follow one of three routes:
X)Convince one or more of the other sole proprietors to become her employees, hire a bookkeeper and lawyer to assure she is now in compliance with employment law (payment of SSN, worker's comp, labor taxes, and whatever else), and probably raise prices to compensate (possibly pricing her out of the market).
Y)Learn video-editing, buy the software to edit video, spend time on video-editing and now reduce the time she has to find people to interview, prep for the interview, and conduct the interview--thus, oddly, lowering her profits just because she increased her skills (I know, its exactly the opposite of what a labor economist would predict if they think only about the return to skills (a focus of labor economics) instead of also considering the logic of comparative advantage (a focus of macroeconomics))
Z)Close her business
In option X, she may be unable to convince any of the editors she trusts to become employees. If not, she will have to search for unemployed video editors to hire. Sounds like a good outcome, but wait! Once she hires someone, her already marginal business (that added some local flavor to local news shows and thus paid major cultural dividends, which is what she loved) now incurs much higher costs, so high she may not be able to stay in business. So, there's a likely net loss in not only money income and taxes paid, but also in the cultural life of her community.
In options Y and Z, the video editors, who are other sole proprietors, lose her business and thus are driven closer to having to close their businesses.
So, that's an example. I could think of multiple other examples. But, let's keep it clear, and just stay with this one for now. Will passing this bill, while failing to exempt small businesses (where size is determined on the basis of something like gross income), produce an outcome we want?
I do t know that this is what they mean by “central to the business”. For instance for Uber, driving is really the only thing that should count as central. This doesn’t mean there aren’t support services for that central role that are essential. Video editing might be essential but the actual videography is the central job. I have to understand their definition better to say for sure.
Also you wouldn’t need a lawyer, just a CPA, which even I had as a sole proprietor LLC with no employees.
I do t know that this is what they mean by “central to the business”. For instance for Uber, driving is really the only thing that should count as central. This doesn’t mean there aren’t support services for that central role that are essential. Video editing might be essential but the actual videography is the central job. I have to understand their definition better to say for sure.
Also you wouldn’t need a lawyer, just a CPA, which even I had as a sole proprietor LLC with no employees.
So take hair/nail salons as an example. They rent a booth and get a 1099.
They are central to the business because without them there is no business.
But they are exempt under this bill. Why is that ?
Why isn't this bill applied across the board to everyone working in California ?
I do t know that this is what they mean by “central to the business”. For instance for Uber, driving is really the only thing that should count as central.
Uber is a technology company. It is a logistics company. It is a business development company. It is a data analytics company.
It is not in the business of owning and driving private vehicles.
One house of the California legislature has passed a bill that would re-classify hundreds of contractors as employees. In many ways this is a good thing. But the law is so messy they've already carved out several industry-specific exceptions. The law provides a three point test...
This bill was partially written by and endorsed by the California Trial Lawyers Association.
If passed, this bill will create perhaps tens of thousands of new plaintiffs who will be recruited by the plaintiff's bar to sue honest businesses. In your mind's eye, you can already see the late night commercials:
"Have you ever received a 1099 from a company for work you performed? You may be entitled to cash compensation. Call the Law Offices of XXXX immediately for a free, no obligation consultation. Live operators are standing by for your call..."
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
