Shared by Jill Romano during CTA meeting of October 14, 2019

Note: This is just some general suggestion of direction, not legal advice. Please seek professional legal guideance specific to your business setup.

AB5 / Independent Contractors

While there is no Magic Answer, we must each review our own business and speak to legal counsel to ensure if we are ever challenged, we can demonstrate enough protection in place. This will be different for each business. Should an Agency be challenged, the courts will look at many factors and then weight each to determine…so no Magic Answer

Discussion Points: AB passed and Travel Agents received exemption

Review by Agency:

1. Core Agency Business

2. Duties in large part define the difference between Employee vs IC

• Duties of an Employee ( list)

• Duties of an Independent Contractor (list)

3. Arbitration Agreement, if not in place now, recommend including

4. Each IC should become an LLC and the Agency contracts with the LLC not the individual

5. Benefits

Additional Factors:

1. Distinct Occupation/Business – for the LLC ( unique and different from the Agency) 2. Rental Fees

3. Access to supplies and phones, computers, etc

4. Training

Consider offering Employment

Concerns regarding the Borello test:

Business license and or LLC should demonstrate an address separate from hiring entity

Revised Professional Services Exemption Section:

(c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for "professional services" as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:

(A) The individual maintains a business location, which may include the individual's residence, that is separate from the hiring entity.

(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.

(C) The individual has the ability to set or negotiate their own rates for the services performed.

(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individual's own hours.

(E) The individual is customarily engaged in the same type of work performed under the contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.

(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.

ASTA from 8/31/19

The only provisions of the amendment that may require modest changes to current business practices are a requirement that an independent contractor (IC) must "maintain a business location, which may include the individual's residence, that is separate from the hiring entity" and must be "customarily engaged in the same type of work performed under the contract with another hiring entity" or must "hold themselves out to other potential customers as available to perform the same type of work." Further, to be covered under the pre-Dynamex standard, the IC must be in compliance with the California Seller of Travel law, either by registering or qualifying for the exemption from the registration requirement. See full text below.

CST – they are covered under the Agency

E&O – may be a good idea to purchase individual coverage vs umbrella agency