CALIFORNIA SUPREME COURT CHANGES STANDARD FOR CLASSIFYING WORKERS AS INDEPENDENT CONTRACTORS
On April 30, 2018, the California Supreme Court changed the standard used to determine whether a person is an independent contractor or employee of a company.
The Dynamex Operations West, Inc. v. Superior Court case centered around whether delivery service drivers for Dynamex were independent contractors or employees. For the past 30 years, companies relied on a multi-factor test in California that focused on whether the company had control over the how the work was being completed to classify a worker. Dynamex, also relying on this standard, argued that their drivers were independent contractors because the drivers set their own driving schedules, used their own vehicles, had the ability to decline delivery assignments and could work for multiple companies.
The Supreme Court, however, adopted a new standard in the Dynamex case and ruled that the drivers were in fact employees and allowed the drivers to be certified for a class action lawsuit.
The new “ABC test” will likely make it difficult for companies to classify workers as independent contractors in California because it presumes all workers are employees unless the company can demonstrate that the worker:
A). is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of such work and in fact; and
B). performs work that is outside the usual course of the hiring entity’s business; and
C). is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
Part A of the test includes similar language from the previous test with respect to control; however Parts B and C impose new restrictions on companies being able to classify a worker as an independent contractor. For Part B, the Supreme Court provided an example that a plumber or electrician who is hired by a retailer to perform maintenance work at a retail store is truly an independent contractor because the work being provided is outside the usual course of the retailer’s business. Part C is designed to identify those workers who have decided to go into business for themselves, regardless of whether the worker has actually formed a separate entity.
With this new standard in place, companies should reevaluate existing agreements with independent contractors to ensure whether these workers are indeed independent contractors under the new ABC test or should now be classified as employees and afforded the benefits of an employee.
January 20th, 2018
Thank you Gurvey’s Law for having me on your show!
I had such a blast recording this interview, and sharing my knowledge on cryptocurrency!
Click here to listen to the show. Alongside other cryptocurrency experts, entrepreneur Cameron Chell and Harvard University economics professor Jeffrey Miron, we discuss the answers to the following questions on this popular topic:
What is the future of #Bitcoin and other cryptocurrencies? As the price of Bitcoin continues to cause awe with dramatic swings, is this the beginning or the end of the cryptocurrency “bubble”? What are the telltale signs that you should be looking at when considering your options? Will governments intervene with regulatory measures? How will regulation affect the prices of cryptocurrencies?
On January 18th, the Securities and Exchange Commission (SEC) released a Staff Letter addressed to the Investment Company Institute and the Asset Management Group of the Securities Industry and Financial Markets Association (SIFMA).
The letter outlined the SEC’s concerns about cryptocurrency exchange-traded funds (ETFs). Specifically, the letter stated that there are “significant outstanding questions concerning how funds holding substantial amounts of cryptocurrencies and related products would satisfy the requirements of the [Investment Company Act of 1940] and its rules.”
The letter identified 5 specific areas of concern:
- Potential manipulation and other risks
The letter posed several questions under each area of concern, some of which are: (i) What are the policies and procedures to determine the fair value of cryptocurrency related products? (ii) How would funds classify the liquidity of cryptocurrencies and cryptocurrency related products? (iii) How would the custody requirements be satisfied for cryptocurrency holdings? (iv) How would the fragmented, volatile and high-volume trading characteristics of cryptocurrencies allow ETFs to comply with market price requirements? and (v) How will ETFs ensure investor protection with cryptocurrencies that have a higher opportunity for fraud and manipulation than traditional securities?
The letter concluded by saying the SEC does “not believe that it is appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products” until the questions in the letter are satisfactorily addressed. The SEC also stated that it has requested that sponsors withdraw registration statements that have already been filed for such products.
The full letter can be found here:
Staff Letter: Engaging on Fund Innovation and Cryptocurrency-related Holdings
Join me on Friday August 11th at Cross Campus Pasadena to learn how to network with investors – the right way.
For more info and RSVP, click here:
The California Secretary of State’s office announced this week that statements of information for California limited liability companies (LLCs) can now be filed online.
Secretary of State Alex Padilla said the goal with implementing this online service for LLCs is to streamline the process so that “entrepreneurs can focus less on red tape and more on growing their business.” Corporations already had the ability to file statements of information online, but previously the statements of information for LLCs had to be mailed into the Secretary of State’s office.
As a reminder, statements of information are due 90 days after initial formation and every 2 years thereafter. They also require interim statements of information if any information needs to be updated.
The new online form can be accessed here: https://llcbizfile.sos.ca.gov/.
See the full press release here: http://www.sos.ca.gov/administration/news-releases-and-advisories/2017-news-releases-and-advisories/secretary-padilla-announces-llc-statements-information-can-now-be-filed-online-and-new-bizfile-california/.
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Date: Saturday, January 21, 2017
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