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Uhh yeah I’ll ignore this law completely then, and when it’s an issue I’ll just exit California. It literally makes no sense at all. We hire videographers nationwide to film projects for businesses, and they ship the footage to us in LA where it’s edited. Of course they’re central to our business, and many don’t bother to establish their own companies because they’re doing it solo, but they ARE contractors by every definition of the word. They bring their own equipment, we don’t have any supervision of them at all, and they’re basically told what the client is looking for in a general sense but not told how to do their jobs. That’s why they’re professionals. Everyone’s a contractor in the film world.
They’re also paid $75-100/hour so nobody cares or feels bad for them that they’re “not employees.” If they were employees they wouldn’t be making that kind of money. As with almost anything CA does, it’s insanely stupid. I hate that state and everyone who runs it, but mostly it’s the people who live there who are just painfully dumb.
I do not think out of state contractors are going to be defined as employees. I think you're taking the word "central to the business" and making it too wide.
I think the problem is especially endemic in California. There is a large distinction between contractors and employees in part because only employees will receive stock options and large benefit packages. There are rules surrounding these being presented uniformly....and this can be problematic if you introduce low paying jobs.
I worked at one large F100 company in the area that had more contractors than employees. Contractors were managing other contractors. Contractors were working in roles for 5-6 years. So many people found themselves stuck as essentially a full time employee, but slated as a contractor. All those sticky rules surrounding termination and whatnot are then gone....I don't like you're tie....don't come back tomorrow.
For people that would prefer full time employment, this is problematic. Temps are much less likely to save for retirement as they have fewer options to do so. While regulation requires temp agencies to offer insurance, it's often atrocious and with no subsidy. No vacation. No stability. The wages are worthless when it comes to things like getting a loan. The income could stop the next day.
What California is missing out on is a vast amount of payroll taxes. Yes the eventual agency is paying a rate, but it is a rate that is lower than a direct hire would generate. Terminations are centered onto agencies and unemployment taxes remain artificially low at larger companies and capped at the agencies.
So California has a problem. Trying to artificially blend contractor and employee is hardly the solution. It doesn't make for a proper employee relationship for those that want one, and it endangers the most vital selling point for those of us that wish to remain free....our ability to remain variable.
First of all, the bill isn't finalized and is expected to have revisions before it goes to the state senate. It has already exempted a multitude of businesses, and apparently the final version will include exemptions for small businesses. Even so, perhaps some may be hurt. It;s hard to change any law without anyone getting caught in the net. But just like the ACA helped many more than those hurt by it (I was one of those hurt by it but still I can see it was needed), this bill will help more workers than it hurts, especially if other states follow suit.
Uber and Lyft drivers are being classified as contractors, with none of the protections employees get, yet none of the benefits contractors get, such as being able to negotiate and set their rates. Just as past decades when Walmart forced California to provide health insurance and financial assistance to their employees because they wanted to avoid those expenses, Uber and Lyft are profiting through avoidance of taxes and other employee expenses that every other business pays. I'm not going to throw the baby out with the bathwater because their might be some hiccups on the way to fixing it. It;s fine for you to say "it's fine the way it is" but tens of thousands of California workers do not agree.
uber/lyft could just require that the drivers are true business owners via LLC's.
Only $70 in California. As an added benefit it protects their personal assets.
First of all, the bill isn't finalized and is expected to have revisions before it goes to the state senate. It has already exempted a multitude of businesses, and apparently the final version will include exemptions for small businesses.
Why in the world should there be an uneven playing field where some businesses are exempt?
Quote:
Originally Posted by ocnjgirl
Uber and Lyft drivers are being classified as contractors
Independents who contract with Uber and/or Lyft to use Uber/Lyft technology as an intermediary ARE contractors.
uber/lyft could just require that the drivers are true business owners via LLC's.
Only $70 in California. As an added benefit it protects their personal assets.
California's single-party rule wants those independents to be required to be on the Uber/Lyft payroll, so they (a) can be unionized, and (b) the unions can then reliably contribute money to Democratic politicians.
California's single-party rule wants those independents to be required to be on the Uber/Lyft payroll, so they (a) can be unionized, and (b) the unions can then reliably contribute money to Democratic politicians.
Oh I totally agree. The UAW is making a big push for this.
They cannot even talk of unionizing unless they are employees.
It's not limited to California either.
https://www.npr.org/2019/05/15/72376...ers-saw-it-com
The NLRB released the advisory memo on Tuesday, nearly a month after it was originally issued. It concludes that Uber drivers are independent contractors and not employees — a classification that means they have no right to form a union or bargain collectively.
This is for the many, many companies using 1099 as a work-around to giving employees the protections of a W2 worker, including unemployment benefits, workers comp, etc. and having to pay SS and Medicare taxes.
Did it ever occur to you that the over-burdening laws, rules and regulations streaming out of the federal, State, county and municipal governments are the reason employers are doing that?
Well, now you have something new to think about.
Obviously, you've never run a company or had a part in company operations.
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Originally Posted by KaraG
The requirement about not doing work central to the company's business is very subjective.
Not really. It's well-defined by case law in all 50 States. Some actions were filed under the Fair Labor Standards Act, while others came about over contract performance or agency relationships.
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Originally Posted by KaraG
The rules should be the same as the IRS.
The IRS is only concerned with taxes.
Quote:
Originally Posted by SocSciProf
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?
Quote:
Originally Posted by SocSciProf
Except for "found footage" movies, videography precedes video editing but there's no distribution (and thus no payment) without video editing. Thus, it is central to the business.
Your conclusions are all wrong.
It is not central to her business.
Her business is distributing video products.
State the law that compels anyone to edit any video for any reason prior to distribution.
Good luck with that.
Since its inception, the editing of film, video and sound has been separate and apart, just as visual, sound and special effects are separate and apart and all have been contract services, as they should be.
According to you, a general contractor should be required to have plumbers, carpenters, pipe-fitters, electricians, mason and the like on their payroll, since that is "central to the business."
If her business was editing film, video or sound products, and she contracted the labor for that, then, yes, she'd be required to hire people, but editing is not her business, while distributing is.
Quote:
Originally Posted by SocSciProf
But the real issue is this:
versus
Uber, Lyft, Amazon, and other large companies will have the money and lawyers and connections in government(s) to litigate their status for a decade.
The California Supreme Court already ruled on that in May 2018 in its Dynamex Operations West, Inc. v Superior Court decision.
The central business of Dynamex is transportation. It provides same-day and other courier and delivery services.
To save money, Dynamex terminated all of its drivers and then re-hired them as independent contractors. One of the former-drivers-turned-independent-contractor sued.
The California Supreme Court said Dynamex was wrong. My guess is this pending legislation in California is in response to the Dynamex decision.
Note that under this ruling, Uber and Lyft cannot use independent contractors, since their central business is transportation, specifically taxi services.
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Originally Posted by macrodome2
The IRS has already defined a contractor vs. employee.
That's for federal income tax purposes, and doesn't necessarily apply to States, counties or municipalities and their laws and regulations, nor is it related to the Fair Labor Standards Act.
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Originally Posted by RationalExpectations
Uber doesn't exploit anything whatsoever.
Yes, it does, because it fails the test.
The worker is free from the control and direction of the hirer in relation to the performance of the work, both under the contract and in fact.
Aren't drivers required to display the Uber icon/symbol in their vehicles?
Well, there you go. And, those aren't the only things Uber drivers are required to comply with under Uber company policies. You cannot be independent if you have to conform to policies.
The worker performs work that is outside the usual course of the hirer’s business.
Uber is a taxi-service, right? What exactly are Uber drivers doing?
Uber fails that test.
The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hirer.
What Uber is doing is not customary.
If Uber sponsored public or private events, and then hired independent contractors to transport people to those events, that would be customary, but that's not what Uber is doing.
Quote:
Originally Posted by RationalExpectations
Moreover, Uber is far from making money. It reported an operating loss of $3 billion in 2018 after losing more than $4 billion the previous year.
Uber has lost more money, faster than any venture in history. Uber destroyed more shareholder value in its first two days of trading than any IPO in history – by a wide margin.
What I'm hearing is share-holders acted stupidly.
I sure hope they're prepared to lose more money, because both Uber and Lyft are going to be forced to hire those drivers and put them on the company pay-roll.
uber/lyft could just require that the drivers are true business owners via LLC's.
Only $70 in California. As an added benefit it protects their personal assets.
But they are not treated as business owners. They can't negotiate their rates. It may also be only $70 to register, but when I was LLC I needed a CPA and it cost $750 to do my taxes. I also had to pay half the social security and medicare taxes.
But they are not treated as business owners. They can't negotiate their rates. It may also be only $70 to register, but when I was LLC I needed a CPA and it cost $750 to do my taxes. I also had to pay half the social security and medicare taxes.
Those uber drivers have to pay SE taxes as well, LLC or not.
You think they don't have to pay those taxes as independents ?
My son does uber sporadically for extra money. I got him paying SE taxes quarterly so he's not shocked at the end of the year because he's always been an employee. There is no mandate that you have to hire a CPA to do your taxes..Turbo Tax Home & Business...$30
Negotiating rates is not a mandate. Company says.."I'll pay $xx for your work" You can say yes or walk.
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