Classification of Subcontractors?

Based on Californias new independent contractor laws, i'm afraid that my buisness model may be at risk.

My company does marketing & sales for office cleaning services. We sell the clients, sign the contract in our company name and subcontract the work to other owner operators.

Typically, our owner operators have their own LLC, with 1-3 employees, their own insurances, equipment, supplies, and they all have other clients besides the work we give them.

The work we give them is recurring and can range from 1X-5X per week.


Only a small % of our subcontractors are individuals who own their own business and do the labor themselves.


I'm concerned with californias new contractor classifcation laws, and I feel they may pose limitations to this business model.

According to the new laws, all three tests must be met or the "subcontractor" would actually be an employee.

This is Californias new tests for classifying:

1. the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact
2. the worker performs work that is outside the usual course of the hiring entity's business; and
3. the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Does this only apply to individual 1099 contractors or also to subcontractors who are larger than just one person?

Do you really want to make business decisions with information dispensed by anonymous strangers?

You should seek the guidance of a CPA or the counsel of a tax attorney.

army judge said:

Do you really want to make business decisions with information dispensed by anonymous strangers?

You should seek the guidance of a CPA or the counsel of a tax attorney.

Click to expand...

Just seeking opinions. Obviously, I wouldn't do anything without consulting with a professional.

Crext123 said:

Just seeking opinions. Obviously, I wouldn't do anything without consulting with a professional.

Click to expand...

If you are "obviously" going to consult with a professional, then why waste time here?

Crext123 said:

I wouldn't do anything without consulting with a professional.

Click to expand...

Good.

Wow, this is terrible. I thought this was a place to ask legal questions and that people would chime in with their thoughts.

Obviously nobody should take any information and use it to make decisions without seeking help from an actual lawyer.

Whats the point of this forum?

Crext123 said:

Whats the point of this forum?

Click to expand...

You operate a BUSINESS and you desire to be paid for your efforts.

Don't RISK your business by soliciting FREE legal information.

You asked questions that would require someone to do legal research to answer properly.

That is NOT the purpose of this board.

This board exists to discuss, if the VOLUNTEERS desire to do so, simple (as in minor) legal questions.

You're seeking legal opinions.

You can visit MOST attorneys INITIALLY for a FREE legal consultation.

The attorney will visit with you for 30-45 minutes allowing you to ask questions and determine whether you wish to engage the attorney's services.

What you asked BELOW is what clients pay for, a legal opinion, legal guidance, as in legal services.

Crext123 said:

This is Californias new tests for classifying:

1. the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact
2. the worker performs work that is outside the usual course of the hiring entity's business; and
3. the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Does this only apply to individual 1099 contractors or also to subcontractors who are larger than just one person?

Click to expand...