I have written repeatedly of how hostile California has become to businesses. Just this month, when you thought is couldn’t possibly get more onerous, California has yet again made it more challenging to operate a business. The following is a simply a small sampling of what California is doing to businesses:
ABC is NOT as easy as 123!
As you are aware, Gordon Law strongly advocates the use of Independent Contractors (when it makes sense for your business). If your business is in California, this useful tool is essentially banned. About a year ago, the California Supreme Court adopted the ABC test to determine whether a worker was an employee or an independent contractor. Last week, California approved legislation that extended the prohibitions on Independent Contractors. This is bad news for all types of businesses – although notably lawyers are exempt (it pays to have a well-paid lobby in California). The most frightening part about this is how it will be enforced. Predatory plaintiff lawyers will continue to file class action lawsuits. The result will be extraordinary legal fees for employers.
Courts are the ONLY way to go!
In almost all of the contracts that Gordon Law drafts for its clients, we include arbitration clauses for dispute resolution. If it is done properly, arbitration can be a faster and less expensive route to adjudicate disputes. Under AB 51, California makes the use of an arbitration clause (or other waivers of judicial rights) as a condition of employment a misdemeanor. So, if your business wants to streamline dispute resolution, it may face criminal prosecution.
Time after time after time…
- If an employee claims some sort of discrimination (race, sex age, etc), under a newly enacted California law, the employee would have three years to bring a claim. This law extends the deadline to a period six times the length of the federal standard (which is 180 days).
None of these challenges exist to businesses in Nevada. Nevada continues to allow for independent contractor agreements. However, as I’ve written before, there are certain criteria that must be addressed, so you should not try to draft one without the assistance of an experienced lawyer. Although there have been some modifications to arbitration clauses in certain consumer contracts, Nevada still strongly encourages arbitration of disputes. Finally, most (although not all) protections against employment discrimination in Nevada follow the federal laws, thus giving your business greater predictability in this arena.
Nevada remains a business friendly state. Viewing the increasing challenges from California (this does not even take into account the punitive taxes and existing regulations in California), the smartest move for your business is to avoid California and embrace Nevada!
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