CA rules on contract workers vs employees

[Catherine]

Is there anyplace I can review the rules for independent contractor vs employee for CA? I have a client who is considering hiring a contract worker in CA to do some consulting, represent them at trade shows, and the like.

Here in Mass., that person would most likely be considered an employee -- as we have THREE sets of rules from various agencies, all of which are more strict than the federal rules. None of the sets is easy to find.

With that in mind, rather than spend hours rummaging through the FTB site, I thought someone here might have a quicker way for me to do that research.

TIA,

Catherine

[ILLMAS]

LOL before logging on to the forum I had looked up the same question for IL. But here is some information for CA I looked up for you:

http://www.edd.ca.gov/pdf_pub_ctr/de38.pdf

[BulldogTom]

Catherine,

I jspent 3 days at C STAR (California State Tax Agency Representation) this summer presented by the CA Society of Enrolled Agents and we went through this material extensively. In general, CA follows the federal rules, but to a much greater degree of scrutiny. The main issue is control, who has it, even if it is not excercised. Anything that looks like control of the worker's daily activities will probably make them an employee. Providing tools, providing a work space, giving instructions for the way in which the work is to be performed, setting time lines, paying the contractor by the hour and requiring a timecard, the employee not having a business license or professional license. These are all things that would tend to make the worker look like an employee.

If you want to discuss in more detail, or would like some of my materials, PM me and we can set something up.

Tom

Hollister, CA

[Catherine]

Thanks, MAS.

Tom - done.

[Mr. Pencil]

Here in Mass., that person would most likely be considered an employee -- as we have THREE sets of rules from various agencies, all of which are more strict than the federal rules.

California also has several definitions. The one MAS linked is for unemployment insurance, the most aggressively enforced. What you describe sounds like an employee. But even with an independent contractor, your client will probably be considered to have a nexus that requires registering to do business in California. It's a great market here, but access is not cheap.

[Catherine]

California also has several definitions. The one MAS linked is for unemployment insurance, the most aggressively enforced. What you describe sounds like an employee. But even with an independent contractor, your client will probably be considered to have a nexus that requires registering to do business in California. It's a great market here, but access is not cheap.

What is required for a sole prop to do business in CA? Any good links? The client is currently very far from CA -- looking ahead to steps needed so he's ready to do business full time when the fiancee is in grad school there, planning for fall of 2015.

[Mr. Pencil]

What is required for a sole prop to do business in CA? Any good links? The client is currently very far from CA -- looking ahead to steps needed so he's ready to do business full time when the fiancee is in grad school there, planning for fall of 2015.

He's going inter-state as a sole proprietorship? Well, as I said, even an independent-contractor agent will give him a California nexus. The trade show sponsors themselves will probably balk if he tries to dodge sales tax. He will also need to allocate California source income and file a non-resident return. I recommend he take it easy with the tax agencies so he can focus on sales. Set up a California LLC already.

And put the agent on payroll so he can't send his ex-girlfriend when he's too drunk to do the show! Yeah, rule #1 for an independent contractor is you don't get to say who the actual worker is. 3000 miles away.

[kcjenkins]

And contact the Sec of State office/website for info on licensing rules. CA is a state that tries to regulate practically EVERYTHING. Even down to the kind of sheets a motel can use! So no matter what the type of business, ask about their requirements to operate here.