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



Current Version: 03/23/21 - Amended Assembly

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AB612:v98#DOCUMENT

Amended  IN  Assembly  March 23, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 612

Introduced by Assembly Member Mayes

February 12, 2021

An act to add Section 2776.5 to the Labor Code, relating to employment.


LEGISLATIVE COUNSEL'S DIGEST


AB 612, as amended, Mayes. Worker classification: business-to-business voluntary deposit arrangements.
Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.
Existing law exempts specified occupations and business relationships from the application of the ABC test described above, including, among others, a bona fide business-to-business contracting relationship, under specified conditions. Existing law, instead, provides that these exempt relationships are governed by the multifactor test previously established in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
This bill would create a new exemption from the ABC test, described above, for a bona fide business-to-business arrangement that involves a voluntary deposit, as described, under specified conditions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


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 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 lease 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 corporation,(“depositary”) that utilizes its own employees to sell or lease 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 itself and its owners and employees.
(C) The depositary sets the hours of work of its employees. determines which employees will work on any particular day, including the schedule for such employees.
(D) The depositary engages has the opportunity to engage in marketing activities to promote the sale or lease rental of the depositor’s tangible personal property and develop a customer base for itself. property.
(3) The terms of the deposit arrangement are in a writing executed by the depositor and depositary.
(4) The deposit “deposit,” for purposes of this section, consists solely of tangible personal property 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)The deposit agreement expressly gives the depositor the right to set the price and terms of the depositor’s sale or lease of the deposit to the public at the fullest extent permitted by applicable law.

(7)The deposit agreement includes a license by the depositor to the depositary to use the depositor’s federally registered trademark, service mark, or trade name to identify itself to the public as a genuine source of the depositor’s property.

(8)In purchasing or leasing the deposited property,

(6) If customers of the depositary make payments directly to the depositary, which collects depositary to purchase or rent the deposit, the deposit agreement requires the depositary to collect these payments for the benefit of the depositor. depositor, remit the payments to the depositor, and account for the payments received.

(9)The depositary accounts to the depositor for all customer payments and remit payments to the depositor or pursuant to the depositor’s instructions.

(10)

(7) The depositor pays the depositary a commission for undertaking responsibilities to offer, sell, or lease rent the deposit to the public on the depositor’s behalf.

(11)

(8) While the deposit is in the depositary’s custody and possession, the depositary is responsible to the depositor for the deposit’s safekeeping.

(12)

(9) The depositary’s primary business activity is the offer, sale, or lease 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.

(13)

(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).

(14)

(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 lease 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) The exemption When a voluntary deposit meets the conditions in subdivision (b) applies only to a depositary and does not apply to (b), the depositary’s employees, contractors, or agents owners shall not have standing to claim they are the employees of the depositary. depositor.