As a software contractor... (A) and (B) are terrifying. I think (A) means you really can't do contract work while working under the direction of a manager, or PGM. So you essentially have to be doing work for hire rather than filling in a specialist role for a defined period of time. (B)... Wow... So if the company is a software development company, they can't hire contractors???
I really hope I'm reading that wrong. I might want to do work for a California company one day ;-)
You might be reading it wrong... everything in law is in a grey area until further defined in court, but legal documents should typically be read with full boolean logic applied to all the words:
"control and direction" - sure, they give you direction. But do they control what tools you use, when and how you do it?
"connection with the performance of the work" - Are they controlling the final deliverable, or the performance, again, as in when and how the work is done?
I suspect that software consultants have a reasonable argument that they control their own work, while their clients have control over the acceptance of the final deliverable, so the above points are not fulfilled.
Edit: And for B, it just seems like having a 2nd client would fulfill that criteria. Your 2nd client is outside usual course of the 1st clients business.
> I suspect that software consultants have a reasonable argument that they control their own work, while their clients have control over the acceptance of the final deliverable, so the above points are not fulfilled.
What if the consultant is forced to attend every single meeting the client (via PM/other manager) decides to schedule? That seems to violate the spirit of "control over performance" part of it.
That's not really how performance is likely intended to be interpreted here. It's more along the lines of if the client told you "you have to code exactly from X time to Y time using our computer at Z location". At that point you're basically an employee rather than a contractor providing a service/product. Meetings are related to, but not the sole component of performance of work here.
Additionally on (A) this is massively beneficial to contractors. They cannot force you to work in an office or the hours you work which is key for a freelancer/contractor/creator/developer.
The items are already part of California's contract law well before this current gig economy bill.
California classifies 'independent contractor' as [1]:
1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
2. Whether or not the work is a part of the regular business of the principal or alleged employer;
3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
4. The alleged employee's investment in the equipment or materials required by his or her task or his or her employment of helpers;
5. Whether the service rendered requires a special skill;
6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
7. The alleged employee's opportunity for profit or loss depending on his or her managerial skill;
8. The length of time for which the services are to be performed;
9. The degree of permanence of the working relationship;
10. The method of payment, whether by time or by the job; and
11. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.
The key line for software developers who are independent contractors is "Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;"
Contractors that work in a home office, using their skills to bring to a company for a project, at their own place, time and tools, that is an independent contractor.
It could be argued that drivers that own their cars, that can choose to accept or deny a particular task, without it hurting their competitive rating, could be seen as an 'independent contractor'.
I think the gig economy bill from OP is targeting known companies that are taking advantage of this by wanting 'independent contractors' that they can schedule and dictate their day and use metrics against them when they aren't available at the time. They should pay people as employees if they need people available then have contractors fill in when needed. This will probably lead to some fulltime Uber/Lyft and the rest floaters that can be like the current gig setup.
If you really are a consultant and not just a skilled worker with enough pull to negotiate your own terms, B should not apply, you'll be doing something unique that is not normally part of their business. Also, A would not apply because the manager should not have the expertise to actually directly manage you and instead should be setting objectives out in a statement of work.
In 2019, it's probably not too out of scope for nearly any business to argue software is a core part of their daily activities. The digital transformation is basically done, if in the last 10 years you didn't turn your company into a quasi-tech company your competitors did and you died.
I'd make the guess that one could go into finer detail on what specific type of software development falls in-line with the daily activities, but software development in general might be too broad. An ecommerce company probably could argue php development is part of its daily development, but if it hired a contractor to modify their build system, that might be outside the scope of their core business.
I'm just not convinced that's a straightforward question to answer. I once worked for a hardware company that outsourced new hardware development to a contractor. We had a guy in house for maintenance, and the occasional hardware bug that propped up, but we only designed a new box once every 5 years or so... it just didn't make sense to have the team in house. We did manufacturing in house, and we had a huge software team... but though our money came from selling the hardware, we didn't do that in house.
As the company grew much larger, we did eventually expand our product line, and did build a team. But for several years, we just had 1 dedicated hardware guy.
What a huge drag on people’s livelihoods, making a broad swath of mutually beneficial business relationships illegal until someone goes through a multi year legal battle with the state.
Most of the software contractors I know easily meet (A) and (B). In these cases, they bid on the job based on its requirements, have multiple customers, define how they will implement the software, and sometimes even have employees.
When I personally worked as a contractor, the other contractors I worked with mostly bounced from short gig to short gig. That would probably meet (B). (A) was a bit more subjective.
If you're a long-time contractor for a single customer, and that single customer has a high level of direction over your day-to-day work, you are at risk of being defined a W2 employee by a legal entity like the IRS. (Or the state of CA.) In such a case, it's important that you clearly understand the legal difference between a contractor and an employee; and have some frank discussions with your "customer." It's important to point out that your "customer" bears the risk of you being redefined as an employee, so it's in their best interest to make sure that your contractor relationship follows the law as best as possible.
>When I personally worked as a contractor, the other contractors I worked with mostly bounced from short gig to short gig. That would probably meet (B). (A) was a bit more subjective.
I'm confused. You seem to be applying (B) to the contractor somehow, where my reading is that it applies to the company doing the contracting. It doesn't matter what the contractor is doing; if a company makes widgets, they can't hire a contractor to make widgets. It doesn't matter if the widgets are a different color or if the contractor only ever makes widgets for any given company for a few months at a time.
> You seem to be applying (B) to the contractor somehow, where my reading is that it applies to the company doing the contracting
Yes and no. A company that hires contractors who bounce from gig to gig meets (B) assuming that the software in the other gigs applies to different businesses.
Assume I make websites on contracts. If I make a website for a butcher, a baker, and a candlestick maker; the butcher, the baker, and the candlestick maker clearly meet (B).
In those specific examples they meet (B), irrespective of the contractor's work habits. If you make a website for another web developer, the web developer who hired you might not meet (B), regardless of who else you've made websites for. I admit the analogy is a bit tortured, but the point is that (B) depends entirely on the contractee's business and what they're hiring the contractor to do.
>I really hope I'm reading that wrong. I might want to do work for a California company one day ;-)
In theory this should be really good for software contractors, because in this should rip out the middlemen (i.e. the firms who get the contract to do the work and turn around and subcontract the work to you for pennys on the dollar). Now in theory these middlemen are gone and you as the software developer should be able to obtain the contract directly directly from the company.
Huh? The sorts of company-to-company contracts where the individual "contractors" are W2 employees of a contracted company are totally unaffected by this legislation. If anything, this legislation is likely to introduce that relationship where it didn't exist before (e.g. Uber might contract with local companies formed solely to employ Uber drivers in that locality, so that Uber doesn't have to deal with all of the complexity of treating all of its drivers as employees.)
>The sorts of company-to-company contracts where the individual "contractors" are W2 employees of a contracted company are totally unaffected by this legislation.
You must have missed the part of my comment that specifies:
"the firms who get the contract to do the work and *turn around and subcontract the work to you for pennys on the dollar"
>(e.g. Uber might contract with local companies formed solely to employ Uber drivers in that locality, so that Uber doesn't have to deal with all of the complexity of treating all of its drivers as employees.)
Then what is to stop this new employment firm Uber has to contract with to obtain drivers from deciding after they have the infrastructure of drivers in place from cutting Uber out and launching their own ride-share app?
At the end of the day Uber isn't claiming drivers as contractors because of complexity, they are doing it to lower their costs.
I would imagine most software "contractors" that work for a major company are not 1099 - that carries a bunch of risks. Most "Contractors" are W2 employees of a labor for hire company. That still seems perfectly legal. "Hiring entity" would be Big Staffing Company, your customer would be Big Internet Company.
If I read this correctly then if a software house wants to hire software developers as contractors then they can't do that because building software is their main course of business.
However companies like Airbnb (hospitality) and Uber (ride sharing) will be able to hire programmers as contractors because writing software is not main source of income for those firms.
I guess that'd be decided in the courts. But Airbnb and Uber have to develop software in order to carry on their business, so I would come down on the other side of the argument.
I disagree, the apps facilitate their business but Uber and Airbnb aren't in the software development business, as they don't develop software for sale as their primary means of income.
To paraphrase, they're both software companies who happen to do rentals and cars. There's also nothing in that law which talks about core business. It's to do with work in the normal line of business, in other words - work which is regularly performed by the company, rather than specialist work for which a contractor is required.
No, they're both taxi services that happen to use software.
Core business is understood to mean primary revenue generating activity, which is getting paid for facilitating rides. They don't charge any money for the use of the software.
My reading is that it's similar to the UK's IR35 regulation? Do any UK contractors here have any additional experience of working in/out of IR35 to give some context?
Well, it's a different law, but IR35 often hinges on whether you're part of the chain of command in the business, and whether you could substitute another qualified person without the agreement of the client.
HMRC provide this tool to determine employment status:
If what you do as a software consultant is outside of the usual activities of the company you work for I suspect you should be fine.
Uber however is a taxi company and the brunt of their primary activities are done (atm) by contractors. Driving people around is their core business - even if they will probably give the defense that they're only a middle man with an app that links independent drivers up with people looking for a ride.
I think they would argue they are an app company that connects drivers to people that need driving. Or food to people that need food. Etc. What about power sellers on ebay? Since they generate all their income from selling stuff on ebay should they be classified as employees of ebay?
Could uber work around this by having everyone form their own LLC to be an uber driver, and making that process painless for people? (or making it painful and not caring about the long term ramifications)
No, because eBay's business model is charging sellers for services. They don't mandate what you sell, how you deliver, or what payment company to use (now that they no longer own PayPal)
The bill makes an exception for engineers, among other professions:
> An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.
That would not apply to software developers, even if they call themselves engineers, software developers are not licensed professional engineers (i.e. civil engineers).
For example a Software Developer can't start a professional corporation in California like a lawyer, architect, civil engineer, accountant etc...
The American National Society of Professional Engineers provides a model law and lobbies legislatures to adopt occupational licensing regulations. The model law requires:
1) a four-year degree from a university program accredited by the Engineering Accreditation Committee (EAC) of the Accreditation Board for Engineering and Technology (ABET),
2) an eight-hour examination on the fundamentals of engineering (FE) usually taken in the senior year of college,
3) four years of acceptable experience,
4) a second examination on principles and practice
5) written recommendations from other professional engineers.
Is a software engineer really a recognised proffesion in CA?
It's a proffesional level job, but reconisation usually means being a member of some sort of proffesional body - no idea what the software one of those would be?
It's a shame that doesn't exist. I've always thought you could make an especially strong argument for licensing for embedded software people, for many of the same reasons that a PE is licensed.
It wouldn't be a requirement for a job necessarily, but not a bad thing to have.
I doubt such a certification would have any correlation with ability. Maybe the platonic ideal of training and testing that you're thinking of, but not a certification written by the US government. Even competent parts of the government like NIST take forever to update their standards. It would be worse for a licensing bureau with practically no in-house software expertise.
You can get a computer engineering PE, which would probably be appropriate for the vast majority of embedded software developers. There was a software PE for a few years, but my understanding is that it was dropped for lack of interest.
I really hope I'm reading that wrong. I might want to do work for a California company one day ;-)