You can subcontract work to another firm, which has employees. Your contract is with the firm.
California believes that if you "subcontract" an individual to do the work your company is in the business of doing, you're not "subcontracting" with them at all, you're employing them.
That's not a ban on subcontracting. It's a ban on calling an employee a contractor.
Ok, that's more concrete. So, to give a specific example: a friend of mine runs a photography business. He's independently established in the trade.
Sometimes, he subcontracts for others when they have a job they can't fulfil on their own. At other time, he has subcontracted work out to other photographers. They are also independently established.
1. This is banned by the California law?
2. You approve of this restriction?
To be clear, these people aren't employees under the law in Canada, our jurisdiction. California seems to be redefining the word "contractor".
> The Court adopted an “ABC” test for determining “employee” status for purposes of the wage order, which presumptively considers all workers to be employees, and permits workers to be classified as independent contractors only if the hiring business demonstrates that the worker in question satisfies each of three conditions:
> (A) that 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 the work and in fact; and
> (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
> (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed for the hiring entity.
Your friend's subcontracting would be covered by case C. The problem becomes if that subcontractor that your friend sometimes works with only ever does photography work for your friend, and isn't "engaged in an independently established trade" they might run into problems. At some point that starts to resemble a part time employee.
> C Factor: Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity? The Court interpreted this factor as intending to identify an individual who independently has made the decision to go into business for himself or herself, for example, through incorporation, licensure, advertisements, routine offerings to provide the services of the independent business to the public or to a number of potential customers, and the like. The fact that a company has not prohibited or prevented a worker from engaging in such a business is not sufficient to satisfy this factor; rather, a hiring entity will need to prove that the worker is customarily engaged in an independently established trade, occupation, or business.
California believes that if you "subcontract" an individual to do the work your company is in the business of doing, you're not "subcontracting" with them at all, you're employing them.
That's not a ban on subcontracting. It's a ban on calling an employee a contractor.