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Re: California Assembly Bill 5 - Upwork Comment

versailles
Community Guru
Rene K Member Since: Jul 10, 2014
31 of 94

Trasie S wrote:

 

I have a feeling that clients on this platform will just start to hire non-Californians.


Wait, while AB-5 applies to California based hiring companies, are you sure that the contractors have to reside in California for the law to apply to them? It was my understanding (but I may be totally wrong) that the location of the contractor doesn't matter. 

I skimmed through AB-5, and haven't found anything that says contractors must be in California. Again, I may have missed it...

 

 

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"Where darkness shines like dazzling light"   —William Ashbless
mwiggenhorn
Community Guru
Mary W Member Since: Nov 10, 2014
32 of 94

My major client, located in California, who is NOT an Upwork client, has made me an employee as of 1/1/20.  This was on the advice of his accountants and his own reading of the law.  (Client is a well-respected California attorney). I am NOT in California.  I don't much care either way although it's nice to know that I will now be paid by direct deposit every other Friday, although I will get less because of deductions for social security, etc.  We'll see how it all shakes out.

m_sharman
Community Guru
Miriam H Member Since: May 16, 2017
33 of 94

Upwork has spoken. I just received an email from them, I would imagine it would be posted somewhere on the forums. Essentially they are summarizing the law and recommending that we consult an advisor to see what makes sense for our specific business.

 

They also say this applies to all independent contractors in CA, which is what I knew.

 

prestonhunter
Community Guru
Preston H Member Since: Nov 24, 2014
34 of 94

re: "I will get less because of deductions for social security, etc."

 

I'm very sorry to hear that.

 

It is unfortunate that you will receive less pay due to this law.

 

Even though you don't even live in California.

prestonhunter
Community Guru
Preston H Member Since: Nov 24, 2014
35 of 94

So maybe this law has an upside for freelancers (like myself and most of us) who do NOT live in California:

 

"Company owners with independent contractors must now decide whether to hire them as employees or look for help in other states."

 

Read: "California law will force small businesses to rethink staffing"

 

If businesses can save money simply by hiring freelancers OUTSIDE of California, this is a "win-win" situation for businesses and freelancers everywhere (except California).

 

CNBC's article on this topic quotes Upwork:

Screen Shot 2019-12-27 at 11.39.41 AM.png

 

The article discusses freelancers who enter into talks with potential clients, and then end up NOT getting hired after the clients find out that the freelancer lives in California.

djbillings
Active Member
DJ B Member Since: Feb 23, 2018
36 of 94

This is the biggest concern for me. Employers are going to be confused by the law and default to either hiring as W-2 or simply avoiding Caifornia-based freelancers altogether.

 

I don't particularly mind being paid as a W-2 employee as long as I keep my independent status (i.e.; not report to an office or be subjected to annual reviews if that's not what I want). A previous commenter mentioned being paid less because taxes are taken out as a W-2 employee. This is true, but in reality you still pay those taxes when you file, as self-emplyment tax (sometimes more). So you don't really get paid less as a W-2, it's just taken out in advance of filing your taxes.

 

Forming a company as an LLC or S-corp can help, but in California, you pay a minimum $800 fee whether or not you did any business that year. Other states are easier to do business in that way. It's tempting to leave!

 

I believe that after January, the CA legislature will be meeting again to discuss AB5 and hopefully correct what's wrong with it. It originated from Uber drivers who were concerned they didn't have union representation or benefits, but they didn't think through the repercussions and how many people (who actually want to be independent) would be adversely affected.

prestonhunter
Community Guru
Preston H Member Since: Nov 24, 2014
37 of 94

re: "It's tempting to leave!"

 

You have read the news. You know that lots of people and businesses have already left.

 

Not just for this reason. Number one cause of people leaving California is cost of housing and rent. I was raised in California. I would not move back there. The numbers don't add up.

 

Any freelancer can "get a raise" just by leaving California.

 

From "States with the highest and lowest taxes"

 

Screen Shot 2019-12-27 at 3.32.32 PM.png

 

 

re: "Forming a company as an LLC or S-corp can help, but in California, you pay a minimum $800 fee whether or not you did any business that year."

 

It costs $150 in Wyoming.

In Arizona you do not need to pay annual renewal fees.

djbillings
Active Member
DJ B Member Since: Feb 23, 2018
38 of 94

I hear you. I grew up in Arizona, it's a much better state for business in general. The only wrinkle is that I've built a custom screen printing business here, so if we move to another state we could lose a lot of our customer base. It's a conundrum!

versailles
Community Guru
Rene K Member Since: Jul 10, 2014
39 of 94

Preston H wrote:

 

 

re: "Forming a company as an LLC or S-corp can help, but in California, you pay a minimum $800 fee whether or not you did any business that year."

 

It costs $150 in Wyoming.

 


No, it's $50 in Wy.

 

 

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"Where darkness shines like dazzling light"   —William Ashbless
lysis10
Community Guru
Jennifer M Member Since: May 17, 2015
40 of 94

my god $800 to form an LLC? lol

 

I would love to live in Commiefornia for the weather, but those laws, mang.

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