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EDD seminar about AB5.

Today I attended an EDD seminar about AB5. It wasn't a complete waste of time, but in general this really was "AB5 101" and they didn't have answers for very specific or complex questions. It was run by two men who appeared to be in their late twenties, and 5 of the 18 people in the room taking the seminar were themselves EDD employees.


1) They did not let me record audio or video. I said "what are you trying to hide?" and they took it as a joke...


2) They refused to say whether any specific situation passed the ABC test or the Borello test. They referred me to a form, DE 1870, which can be completed by hiring entities and turned in to the EDD if you want to get their opinion on what the working relationship between two parties is.


I said, "That's nice, but nobody's going to use this form, because they are afraid of retroactive penalties," which brings me to...


3) An inquiry to get the EDD's opinion on a worker's employment status using form DE 1870 WILL NOT trigger an audit. In fact, they indicated there are only a few ways audits are triggered:


a) when someone makes an Unemployment Insurance claim and has listed you as an employer;


b) When someone who works for you asks the EDD for an opinion if they are misclassified; and


c) when someone else (usually a competitor) tips them off that you may have misclassified workers.


4) I asked if musicians are fine artists. They said, "We don't know."


5) Business entities who operate (or are taxed as) S-Corps DO have to pay Unemployment Insurance for themselves as an employee, AND YES, they can make an unemployment claim. (They were not as sure about Workers' Comp, that's overseen by different agency, State Fund.)


6) I asked if they knew if Workers Comp had to be paid upfront in a big chunk, and they didn't know, but two other business owners attending told me that their WC insurance providers offered different options: sometimes they paid monthly, sometimes quarterly. WC insurance is one of those things you can shop around for regarding rates and payment terms, and if no insurance company will give you insurance, then State Fund will.


7) The "report employee or ICs 20 days after hire or 20 days after they earn at least $600" went into effect in 2001, but I think someone else clarified that in this group previously, too.


8) If the EDD determines that your workers should be employees, there is no appeal process for that decision. Decisions are made on a case-by-case basis by EDD managers. I pressed on this point a lot (I really want a definition of "control and direction" ) and they said that looking at former cases was advisable, to see how the EDD ruled in those cases. But that's only for the Borello Test - there haven't been any cases yet where the EDD has audited someone under the new rules (meaning AB5 and the ABC test), although there are a couple cases from other states that might be applicable.


9) As far as B2B, meeting that standard remains ridiculous...you have to meet ALL 12 points listed in AB5 under the B2B exemption, and IF you pass ALL of them, THEN you are judged under Borello, which you would obviously pass because Borello is subjective and less strict than those 12 points.


10) They gave me a pamphlet with 9 common misunderstandings about misclassification - I'd rather scan and post that. None of them were a surprise to me, but I have seen them crop up here again and again so they definitely are common misconceptions. See below.


11) I did learn about an interesting exemption from employee status: if you are a Sole Proprietor, and you have family members working for you, your child under 18 does not have to be an employee, and the same is true of your spouse or your parent. But that is only for Sole Props.


12) The handouts were probably more helpful than the actual seminar. See below.


I know I wasn't able to get specific answer to everyone's questions, and I am sorry about that. They honestly seemed like this was all new to them and they were not going to get dragged into talking about specific situations - I wasn't the only one who tried.


Handouts:


Here's a link to the 9 Common Misconceptions about Classification: [https://www.edd.ca.gov/pdf_pub_ctr/de573m.pdf](https://www.edd.ca.gov/pdf_pub_ctr/de573m.pdf)


Here's the form if you are a hiring entity that wants an opinion on whether or not your workers should be classified as employees (they assured me this would not trigger an audit) [https://www.edd.ca.gov/pdf_pub_ctr/de1870.pdf](https://www.edd.ca.gov/pdf_pub_ctr/de1870.pdf)



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