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AB5 Bill in California: What to do now?
Thread poster: Yoonkyung Walters

RobinB  Identity Verified
United States
Local time: 08:46
German to English
It's spreading Dec 23, 2019

Dan,

Other states here in the U.S. are now lining up their own AB5-style legislation, for example New York and New Jersey (already quite advanced). Here's a link to an article about the disastrous impact this is going to have on freelancers in the latter state:

https://www.fastcompany.com/90438917/im-fighti
... See more
Dan,

Other states here in the U.S. are now lining up their own AB5-style legislation, for example New York and New Jersey (already quite advanced). Here's a link to an article about the disastrous impact this is going to have on freelancers in the latter state:

https://www.fastcompany.com/90438917/im-fighting-back-against-laws-that-could-shut-down-my-freelance-business

When I lived in Germany, the question of a closed shop for translators and interpreters ("Verkammerung") used to resurface with monotonous regularity. This proposal would have restricted the practice of translating and interpreting to people with degrees in the subjects, and was pushed by, rather obviously, some graduate translators and interpreters. From German universities, of course, though foreign degrees would be acceptable if they met German standards. Their argument was that only graduate translators and interpreters are able to translate and interpret properly. It always went nowhere, of course, as the window of opportunity for achieving this closed about 50 or 60 years ago. I used to tell them that they'd have come up with evidence that would stand up in court to back their argument. And the response was often that Professors so-and-so of translation/intepreting would provide that evidence. Not exactly compelling evidence.

These legislative initiatives in the U.S. though have a much greater chance of succeeding in destroying the translation and interpeting professions than anything ever seen in Europe. Very depressing.

Robin
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Jean Chao  Identity Verified
United States
Local time: 06:46
English to Chinese
+ ...
Thanks, Robin, one of my agency clients says LLC works for them Dec 23, 2019

Hi Robin,

Thanks for the kind reminder. One of my agency clients sent me the below reply after I asked them whether LLC would work for them. So I guess it's still very confusing as to which type of "corporation" would work under this law at this early stage.

"B2B should work, yes. If you form your own entity (LLC) or you join to others and be a part of a company, that work for us."

I submitted my registration via California Secretary of Department websi
... See more
Hi Robin,

Thanks for the kind reminder. One of my agency clients sent me the below reply after I asked them whether LLC would work for them. So I guess it's still very confusing as to which type of "corporation" would work under this law at this early stage.

"B2B should work, yes. If you form your own entity (LLC) or you join to others and be a part of a company, that work for us."

I submitted my registration via California Secretary of Department website ($75 for registration; $800 annual tax even you have $0 income ). Got a reply after completing my registration online saying that I'll be notified for further details. It's the holiday season. Not sure when I will hear back from them.
https://llcbizfile.sos.ca.gov/registration

Anyway, that's the best I could do now. If my other clients require me to take further action, I'll have to figure it out along the way.

Best,
Jean
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Diane G
 

Dan Lucas  Identity Verified
United Kingdom
Local time: 14:46
Member (2014)
Japanese to English
If they would just leave us alone Dec 23, 2019

RobinB wrote:
These legislative initiatives in the U.S. though have a much greater chance of succeeding in destroying the translation and interpeting professions than anything ever seen in Europe. Very depressing.

It is indeed. A classic example of people unable to do joined-up thinking. I guess if this goes forward it will lead either to an exodus from CA by translators and interpreters, or an exodus from the profession by those living in CA. Perhaps a boon for those who live in less pigheaded states of the US?

Dan


Thomas T. Frost
Diane G
 

Dan Lucas  Identity Verified
United Kingdom
Local time: 14:46
Member (2014)
Japanese to English
Astounding Dec 23, 2019

Jean Chao wrote:
I submitted my registration via California Secretary of Department website ($75 for registration; $800 annual tax even you have $0 income ).

You have to pay tax even if you don't earn? If so, that's outrageous. Clearly they're not much interested in encouraging startups in CA.

Dan


Thomas T. Frost
 

Lincoln Hui  Identity Verified
Hong Kong
Local time: 21:46
Member
Chinese to English
+ ...
Not so unusual Dec 23, 2019

Dan Lucas wrote:

Jean Chao wrote:
I submitted my registration via California Secretary of Department website ($75 for registration; $800 annual tax even you have $0 income ).

You have to pay tax even if you don't earn? If so, that's outrageous. Clearly they're not much interested in encouraging startups in CA.

Dan

I believe that's the case for Japan as well.


 

Michael Newton  Identity Verified
United States
Local time: 09:46
Member (2003)
Japanese to English
+ ...
AB5 Bill Dec 24, 2019

It's not for nothing that people say: "California se fue a la mxxxxx!"

 

Liviu-Lee Roth
United States
Local time: 09:46
Romanian to English
+ ...
Still confused ... Dec 24, 2019

If I am a freelance interpreter and translator and work in California for the Federal Govt (DOJ, FBI, USSS, Fed.courts) this rule can or cannot be enforced? From my understanding, state laws don't apply to federal employers.

Any input on this subject?


 

Dan Lucas  Identity Verified
United Kingdom
Local time: 14:46
Member (2014)
Japanese to English
Quite possibly correct Dec 24, 2019

Lincoln Hui wrote:
I believe that's the case for Japan as well.

Lincoln, I have to say that wouldn't surprise me in the least, as Japan has a longstanding reputation for hostility to small business. I heard some stories from startups when I was helping out with IPOs in Japan...

A friend of mine did set up a company in Japan, and it's clearly been neither cheap nor easy. He mentioned a few months back that some trivial tax procedure - a 10-minute job online for a UK company - had to be performed by him in person at the local tax office, requiring time off work and, naturally, it could only be done on a weekday.

What does surprise me is that AB5 can happen in a country (the US) and a state (CA) that pays such energetic lip service to being "business friendly". They're really not doing themselves any favours. And it seems deeply unjust.

Dan


 

RobinB  Identity Verified
United States
Local time: 08:46
German to English
AB5 only applies to agencies Dec 24, 2019

Liviu-Lee Roth wrote:

If I am a freelance interpreter and translator and work in California for the Federal Govt (DOJ, FBI, USSS, Fed.courts) this rule can or cannot be enforced? From my understanding, state laws don't apply to federal employers.

Any input on this subject?


AB5 doesn't apply to direct client relationships, including public-sector clients (though of course if you're a freelance translator, federal agencies aren't actually "employers" in any case). It would only apply if you were to work for federal agencies through one or more agencies.


Liviu-Lee Roth
 

Audra Worcester
United States
Local time: 06:46
Lithuanian to English
+ ...
Corporation Dec 28, 2019

I was advised to choose corporation. I have chosen to become C corporation but also read that S corporation has better tax benefits such as less SS taxes.

 

RobinB  Identity Verified
United States
Local time: 08:46
German to English
Why C Corp? Dec 28, 2019

Audra Worcester wrote:

I was advised to choose corporation. I have chosen to become C corporation but also read that S corporation has better tax benefits such as less SS taxes.


Audra,
Why did you choose a C Corp? I elected for an S Corp after discussing the pros and cons with my CPA. The S Corp definitely offers tax advantages compared with a C Corp (income tax and SS taxes).

Robin


 

Katalin Szilárd  Identity Verified
Hungary
Local time: 15:46
Member (2006)
English to Hungarian
+ ...
Hungary Dec 29, 2019

Lincoln Hui wrote:

Dan Lucas wrote:

Jean Chao wrote:
I submitted my registration via California Secretary of Department website ($75 for registration; $800 annual tax even you have $0 income ).

You have to pay tax even if you don't earn? If so, that's outrageous. Clearly they're not much interested in encouraging startups in CA.

Dan

I believe that's the case for Japan as well.


Same in Hungary: if you are a sole proprietor you have to pay taxes and contributions even if you didn't earn anything.


Dan Lucas
 

sveradeva  Identity Verified
United States
Local time: 06:46
Bulgarian to English
+ ...
I am also in CA and going to incorporate as a LLC Dec 29, 2019

The good thing is that the $800 taxes are not due until when you file your taxes in April...

 

Diane G  Identity Verified
United States
Local time: 06:46
Member (2013)
Portuguese to English
+ ...
AB5 Bill Jan 6

Ildiko Santana wrote:

Lincoln Hui wrote:

California recognizes sole proprietorship. Can't you obtain a business license and operate as a sole proprietor?


Here is the e-mail I received this morning from my 2nd biggest client of 10 years:

"Thank you for uploading your documents. I see you check Individual/sole proprietor on the W9 and completed with your SSN (and on the Independent Contractor Agreement). For our purposes as a CA resident, if you are a C Corp, an S Corp, or an LLC with tax classification as a C or S Corp as noted on your W9 (green box below), you would be compliant. Anything else (red), we won’t be able to issue your POs for 2020 work."

This decision has little to do with the law, which specifically permits sole proprietorship. After 20 years of doing business in California as an independent contractor, I have no choice but leave either the profession or the state of California. Forming a Corporation is over my budget, especially now that my income is to drop dramatically after January 1, 2020.

Good luck and happy holidays to everyone!


 

Diane G  Identity Verified
United States
Local time: 06:46
Member (2013)
Portuguese to English
+ ...
AB5 Jan 6

I am having the same problem as Ildiko and others. I'm in California and work for agencies in New York. They refuse to accept sole proprietorship, only state registered corporations. I am getting input through a free legal question site.
I have to wonder why agencies are insisting on registering with the state rather than locally (which is in the law, and has been the same way for decades to my knowledge)
Another agency in Utah announced on Jan 3 they won't work with California any
... See more
I am having the same problem as Ildiko and others. I'm in California and work for agencies in New York. They refuse to accept sole proprietorship, only state registered corporations. I am getting input through a free legal question site.
I have to wonder why agencies are insisting on registering with the state rather than locally (which is in the law, and has been the same way for decades to my knowledge)
Another agency in Utah announced on Jan 3 they won't work with California any longer (no notice at all, fortunately I no longer work with them anyway)
Does anyone know of a way that translators could effectively contest this?
A way to start a petition to exempt the translation profession? I hear rumors that such a thing might be happening
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AB5 Bill in California: What to do now?

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