Today's Law As Amended


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AB-612 Worker classification: business-to-business voluntary deposit arrangements.(2021-2022)



As Amends the Law Today


SECTION 1.

 Section 2776.5 is added to the Labor Code, to read:

2776.5.
 (a) Section 2775 and the holding in Dynamex do not apply to a bona fide business-to-business arrangement that involves a voluntary deposit (“business-to-business voluntary deposit”), under the following conditions, as described in subdivision (b).
(b) For a business-to-business voluntary deposit, the determination of employee or independent contractor status shall be governed by Borello, if the business-to-business voluntary deposit meets all of the following conditions:
(1) The depositor is a business entity formed as a partnership, limited liability company, limited liability partnership, or corporation, (“depositor”) that utilizes its own employees to produce, locate, or procure tangible personal property, which it owns, leases, or otherwise has the lawful right to possess, and which it delivers to a depositary to sell or rental to the public on its behalf under the terms of a written deposit agreement.
(2) The depositary is a business entity formed as a partnership, limited liability company, limited liability partnership, or corporation,(“depositary”) that utilizes its own employees to sell or rent the depositor’s tangible personal property to the public, and meets all of the following conditions:
(A) The depositary has at least three employees, as defined in subdivision (b) of Section 2775, who are not lessees, owners, officers, directors, or members of the depositor.
(B) The depositary determines the salary and benefits that it pays to its owners and employees.
(C) The depositary determines which employees will work on any particular day, including the schedule for such employees.
(D) The depositary has the opportunity to engage in marketing activities to promote the sale or rental of the depositor’s tangible personal property.
(3) The terms of the deposit arrangement are in a writing executed by the depositor and depositary.
(4) The “deposit,” for purposes of this section, consists of tangible personal property, excluding securities, money, digital currency, bank accounts, promissory notes, deeds, or any other type of currency or financial instrument.
(5) The deposit agreement expressly provides that, upon its expiration or termination for any reason, the depositary shall account for and return the remaining deposit in its possession to the depositor.
(6) If customers make payments directly to the depositary to purchase or rent the deposit, the deposit agreement requires the depositary to collect these payments for the benefit of the depositor, remit the payments to the depositor, and account for the payments received.
(7) The depositor pays the depositary a commission for undertaking responsibilities to offer, sell, or rent the deposit to the public on the depositor’s behalf.
(8) While the deposit is in the depositary’s custody and possession, the depositary is responsible to the depositor for the deposit’s safekeeping.
(9) The depositary’s primary business activity is the offer, sale, or rental of tangible personal property placed in its custody by one or more depositors.
(10) Nothing in the deposit agreement restricts the depositary from maintaining a business location, which may include the business service provider’s residence, that is separate from the business or work location of the contracting business.
(11) The deposit relationship is not a franchise as defined in Section 31005 of the Franchise Investment Law (Division 5 (commencing with Section 31000) of Title 4 of the Corporations Code).
(12) Neither the depositor nor the depositary engage in any activities regulated in the Financial Code.
(c) The exemption in subdivision (b) applies to commercial arrangements that qualify as a voluntary deposit pursuant to Section 1814 of the Civil Code and otherwise meet the conditions described in subdivision (b). Voluntary deposits pursuant to Section 1814 of the Civil Code include bailments, in which a depositor deposits tangible personal property with a depositary for purposes of having the depositary rent the property to the public, and consignments, in which a depositor deposits tangible personal property with a depositary for purposes of having the depositary sell the property to the public.
(d) When a voluntary deposit meets the conditions in subdivision (b), the depositary’s owners shall not have standing to claim they are the employees of the depositor.