{"id":536,"date":"2019-10-02T18:38:27","date_gmt":"2019-10-03T01:38:27","guid":{"rendered":"https:\/\/contractorslicensingschools.com\/blog\/?p=536"},"modified":"2019-11-04T16:23:42","modified_gmt":"2019-11-04T23:23:42","slug":"californias-new-independent-contractor-law-and-how-it-may-affect-your-contracting-business","status":"publish","type":"post","link":"https:\/\/contractorslicensingschools.com\/blog\/californias-new-independent-contractor-law-and-how-it-may-affect-your-contracting-business\/","title":{"rendered":"California\u2019s New Independent Contractor Law and How It May Affect Your Contracting Business"},"content":{"rendered":"<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/contractorslicensingschools.com\/blog\/wp-content\/uploads\/2019\/09\/shutterstock_796580935.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-524 alignleft\" src=\"https:\/\/contractorslicensingschools.com\/blog\/wp-content\/uploads\/2019\/09\/shutterstock_796580935-300x200.jpg\" alt=\"\" width=\"300\" height=\"200\" srcset=\"https:\/\/contractorslicensingschools.com\/blog\/wp-content\/uploads\/2019\/09\/shutterstock_796580935-300x200.jpg 300w, https:\/\/contractorslicensingschools.com\/blog\/wp-content\/uploads\/2019\/09\/shutterstock_796580935-768x512.jpg 768w, https:\/\/contractorslicensingschools.com\/blog\/wp-content\/uploads\/2019\/09\/shutterstock_796580935.jpg 1000w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>These days, independent contractors are a popular hiring approach for all kinds of businesses. Companies like Uber rely largely on staff with no benefits and little rights within the company. With the recent passage of California\u2019s AB 5 law, the way an independent contractor works in the state is about to change. Here\u2019s what you can expect from the new law, and a few ways it might affect your contracting business.<\/span><\/p>\n<p><strong>What Is the Difference Between an Employee and an Independent Contractor?<br \/>\n<\/strong><span style=\"font-weight: 400;\">Independent contractors have been a prominent feature of the construction industry for decades, so it may be difficult for people in the industry to understand why California passed this new law. After all, an independent contractor has a lot of flexibility that a regular employee of a business does not. If you want to set your own hours and select the projects you think will be the best fit for you, being independent helps you achieve that. It\u2019s why a lot of people start a contracting business in the first place. However, being your own boss also means that you lose a lot of the protections that state and federal laws guarantee employees. These include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">minimum wages<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">tax withholding<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">access to health insurance<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">retirement planning<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">When you\u2019re not someone\u2019s employee, it\u2019s on you to provide these things for yourself. You may even pay higher taxes as a result.<\/span><\/p>\n<p><strong>What Triggered AB 5\u2019s Passage?<br \/>\n<\/strong><span style=\"font-weight: 400;\">Nationwide, companies have been switching from a workforce primarily made of employees to one mostly made up of contractors. For people who want the benefits of running their own businesses and working for a variety of clients or organizations, this can be a benefit. However, a number of businesses have recently been called out for abusing this system as a way to pay lower wages while still confining their workers to employee-like conditions. Businesses that rely on a large workforce to provide remote services, like Uber, are the primary targets of this new legislation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>What Is the AB 5 Law?<\/strong><br \/>\n<\/span><span style=\"font-weight: 400;\">The AB 5 law was passed in September 2019 and will take effect in California January 1st, 2020. Although the law only carries weight in the state of California, it may affect companies located in other places that hire contractors based in California. Basically, the law requires that businesses that use independent contractors be able to prove that the people they hire in this capacity function as independent contractors. In order to classify as an independent contractor, people must:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">be able to select their own work and generally control how it is done<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">perform work other than that which the business generally does<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">have an independent line of work or their own business<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This means that someone who runs a business as an independent contractor wouldn\u2019t be classified as an employee under this law. However, someone who works under the dictates of the business owner and performs tasks related to the core of the business may be ruled an employee under AB 5.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>What Does AB 5 Mean for Construction Businesses?<\/strong><br \/>\n<\/span><span style=\"font-weight: 400;\">When you first start out as an independent contractor, it makes sense to establish yourself as a separate business. This will provide an easy form of proof against any claims when you work as a subcontractor under someone else. Once you get to the point of hiring employees, make sure that anyone you bring on as an independent contractor can meet these requirements. Companies that treat regular workers as contractors when they really should be employees can get hit with a higher tax liability and penalties.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Being an independent contractor is part of what many people love about the construction industry. You get to control your own destiny. Just make sure that you know what the local laws are, so you can do it right. To get started on the path to building your future, visit CSLS today!<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>These days, independent contractors are a popular hiring approach for all kinds of businesses. Companies like Uber rely largely on staff with no benefits and little rights within the company. With the recent passage of California\u2019s AB 5 law, the way an independent contractor works in the state is about to change. Here\u2019s what you &#8230; <a title=\"California\u2019s New Independent Contractor Law and How It May Affect Your Contracting Business\" class=\"read-more\" href=\"https:\/\/contractorslicensingschools.com\/blog\/californias-new-independent-contractor-law-and-how-it-may-affect-your-contracting-business\/\" aria-label=\"Read more about California\u2019s New Independent Contractor Law and How It May Affect Your Contracting Business\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[220],"tags":[],"class_list":["post-536","post","type-post","status-publish","format-standard","hentry","category-contractor-business"],"_links":{"self":[{"href":"https:\/\/contractorslicensingschools.com\/blog\/wp-json\/wp\/v2\/posts\/536","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/contractorslicensingschools.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/contractorslicensingschools.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/contractorslicensingschools.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/contractorslicensingschools.com\/blog\/wp-json\/wp\/v2\/comments?post=536"}],"version-history":[{"count":0,"href":"https:\/\/contractorslicensingschools.com\/blog\/wp-json\/wp\/v2\/posts\/536\/revisions"}],"wp:attachment":[{"href":"https:\/\/contractorslicensingschools.com\/blog\/wp-json\/wp\/v2\/media?parent=536"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/contractorslicensingschools.com\/blog\/wp-json\/wp\/v2\/categories?post=536"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/contractorslicensingschools.com\/blog\/wp-json\/wp\/v2\/tags?post=536"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}