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

RobinB  Identity Verified
United States
Local time: 08:51
German to English
CoPTIC Jan 7

Diane,

For information on the campaign to get a carve-out (exemption) for T&Is, see https://coalitionptic.org/

I think what they mean with "state registration" is the formation of an LLC, which you would do with the state authorities (here in Texas, it's with the Secretary of State here in Austin).

Robin

[Edited at 2020-01-07 04:05 GMT]


Diane G
 

Diane G  Identity Verified
United States
Local time: 06:51
Member (2013)
Portuguese to English
+ ...
AB5 Jan 7

Hi Robin,

Yes, LLC would work if it's accepted. It is not with the NYC agencies I work for. A simple DBA works for a Virginia agency I know.

The mentioned Coalition gives contact info for Governor Newsom and state representatives. I wrote to them with the letter below, if anyone is interested in joining me to fill up their inboxes and being the squeaky wheel. J


I/we write today to request that you revisit the proposed amendment to AB5 to exempt lan
... See more
Hi Robin,

Yes, LLC would work if it's accepted. It is not with the NYC agencies I work for. A simple DBA works for a Virginia agency I know.

The mentioned Coalition gives contact info for Governor Newsom and state representatives. I wrote to them with the letter below, if anyone is interested in joining me to fill up their inboxes and being the squeaky wheel. J


I/we write today to request that you revisit the proposed amendment to AB5 to exempt language services providers, for the following reasons.
1 - Interpreters are a legal right in family and criminal law. The downsizing of the CA courts and subsequent layoffs forced many into independent contractor status. Legal interpreting is vital to thousands of people in California.
2 - Translation agencies from all over the country are now letting go of/ceasing to do business with translators out of fear of incurring fines, when the actual criteria for independent status has not changed in the law itself. Others are requiring incorporation, placing a legally unnecessary financial burden on workers in this industry, as historically and currently a DBA and business license are sufficient.

"(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:
(1) If a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation (“business service provider”) contracts to provide services to another such business (“contracting business”), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied: (...)
(AB5 Section 2 (e)(1))"

3 - Legal, academic and medical translations are vital to immigration, work visas, student visas, international contracts, legal actions and numerous other types of transactions.
4 - The "B" section of the ABC test virtually makes it impossible to conduct a translation or interpretation business, as the contractors are clearly in the same course of business as the hiring company. If enforced, this section alone could effectively put companies out of business for noncompliance, which could further damage the economy in and outside California.

In short, AB5 threatens an industry that is established and essential in California, nationally and internationally. It also threatens the livelihood of the workers in this industry with financial burdens or – quite suddenly - no income at all.

Based on the reasons above, I/we respectfully as that you reconsider Senator Andreas Borgeas’ proposed amendment for an exemption for language service providers.

Thank you
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Jean Chao  Identity Verified
United States
Local time: 06:51
English to Chinese
+ ...
Will send the letter to Newsom and my district representatives Jan 7

Even though I have already registered to form my LLC, I believe we translators and interpreters need to band together and let these people hear our voice. Thanks for the letter, Diane.

Diane G
 

Karine Lelaizant  Identity Verified
United States
Local time: 06:51
Member (2010)
Japanese to French
+ ...
LLC with S Corp election Jan 10

RobinB wrote:

An S Corp election for the LLC should do the trick (because it makes you technically the employee of your own LLC, and you will have to pay social security taxes on your "salary"), but please remember a) that an LLC is only worthwhile if you're generating sufficient annual business EBT (revenue less expenses), typically >$75k, and b) once you make the S Corp election, you can't reverse it.


Hi Robin,
Thank you for your input in this thread. I too am affected by the AB5 law, but have not yet made the jump and created an LLC. I am looking at other options, including relocating, but that's a different topic. I am wondering if you could elaborate on why an LLC is only worth it if you are able to generate at least $75k? I met with an advisor, but he not mention any of that even though he knew my income is much below that. He did recommend electing S Corp status though.
Thank you!


 

RobinB  Identity Verified
United States
Local time: 08:51
German to English
Tax advantages kick in above a certain threshold Jan 11

Hi Karine,

The way my CPA (who has a lot of experience with clients moving to the US from Europe and retaining a client base in Europe) explained it to me when I set up my LLC after moving to the US in 2017, the tax advantages of an S Corp only outweigh the additional expense of an S Corp (compared with a plain vanilla LLC) above a certain income level. She mentioned $70-75k at the time. However, I should perhaps point out that another attractive feature of the S Corp for me was tha
... See more
Hi Karine,

The way my CPA (who has a lot of experience with clients moving to the US from Europe and retaining a client base in Europe) explained it to me when I set up my LLC after moving to the US in 2017, the tax advantages of an S Corp only outweigh the additional expense of an S Corp (compared with a plain vanilla LLC) above a certain income level. She mentioned $70-75k at the time. However, I should perhaps point out that another attractive feature of the S Corp for me was that I would technically be an employee of my own company, so I could start building a social security history here in the US. Part of what I earn is technically classified as a salary, on which payroll taxes are paid, and the rest is pass-through personal income. And I also have to admit that the recent tax reform package has significantly cut my tax burden.

One problem with an S Corp is that it's very difficult to unwind once you've made the election. But: These are just my personal views and experiences, and of course don't constitute any tax advice. If your CPA recommends you set up an S Corp and you are confident in the ability of your CPA to protect your own interests at all times, then by all means follow their advice. But it would certainly be worthwhile to get them to set out the pros and cons of an S Corp in writing.

Robin
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Karine Lelaizant  Identity Verified
United States
Local time: 06:51
Member (2010)
Japanese to French
+ ...
Limited options Jan 12

Hi Robin,
Thank you for taking the time to respond. This makes sense. In my case, I think the options are pretty limited if I want to stay in California and continue to work independently under the new AB5 Law, so my advisor had to take that into account when deciding on the best type of corporation for me. I actually consulted 2 CPAs and they arrived at the same conclusion, so that's reassuring. But as one put it, when it comes to no income at all vs. some income minus some expenses, the
... See more
Hi Robin,
Thank you for taking the time to respond. This makes sense. In my case, I think the options are pretty limited if I want to stay in California and continue to work independently under the new AB5 Law, so my advisor had to take that into account when deciding on the best type of corporation for me. I actually consulted 2 CPAs and they arrived at the same conclusion, so that's reassuring. But as one put it, when it comes to no income at all vs. some income minus some expenses, the decision is not that hard to make, unless I am willing to find a corporate job, change careers, relocate, etc. I appreciate your sharing your experience, thank you!
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RobinB  Identity Verified
United States
Local time: 08:51
German to English
CoPTIC is still fighting to protect your interests Jan 12

Karine,

CoPTIC is still fighting to protect your interests and I'm personally hopeful that they will persuade the Californian lawmakers to grant an exemption (carve-out) for translators and interpreters. It's certainly an uphill struggle, not least because the vast majority of policymakers clearly don't have a clue about the world of translation and interpreting, and especially the structures in our industry and how the industry works in practice. So my suggestion at this point woul
... See more
Karine,

CoPTIC is still fighting to protect your interests and I'm personally hopeful that they will persuade the Californian lawmakers to grant an exemption (carve-out) for translators and interpreters. It's certainly an uphill struggle, not least because the vast majority of policymakers clearly don't have a clue about the world of translation and interpreting, and especially the structures in our industry and how the industry works in practice. So my suggestion at this point would be just to form the LLC, and wait to see whether CoPTIC is successful or not before making the S Corp election. If CoPTIC is successful, you can keep the LLC (it looks good for your business and the additional costs are minor), but if it's not, you can still make the S Corp election.

Robin
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RobinB  Identity Verified
United States
Local time: 08:51
German to English
Letter to Financial Times about AB5 and translators/interpreters Jan 12

A letter I wrote to the Financial Times about AB5 and translators/interpreters was published on January 9. This was in response to a report in the FT about AB5 that focused on gig economy workers such as rideshare and delivery drivers.

You should be able to access the letter and the article at the following links:

https://www.ft.com/content/7b3e7282-2e
... See more
A letter I wrote to the Financial Times about AB5 and translators/interpreters was published on January 9. This was in response to a report in the FT about AB5 that focused on gig economy workers such as rideshare and delivery drivers.

You should be able to access the letter and the article at the following links:

https://www.ft.com/content/7b3e7282-2e19-11ea-a126-99756bd8f45e

https://www.ft.com/content/3c3d0028-2b74-11ea-bc77-65e4aa615551
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Dan Lucas
 

antoni lesinski
Ireland
English to Polish
+ ...
go and organize yourself in a decentralised form Jan 16

Hi all,

This is my first post here.

I think that our future lies in the decentralised organizations on the blockchain. Something in type of a Decentralised Autonomous Organization (DAO) with own currency etc. This could operate globally and would put all the agencies to rest. All we need to organize, crowd fund and gain support from the translators national associations or other professional recognition bodies. The agencies are obsolete parasitic forms that need to be
... See more
Hi all,

This is my first post here.

I think that our future lies in the decentralised organizations on the blockchain. Something in type of a Decentralised Autonomous Organization (DAO) with own currency etc. This could operate globally and would put all the agencies to rest. All we need to organize, crowd fund and gain support from the translators national associations or other professional recognition bodies. The agencies are obsolete parasitic forms that need to be erradicated. We need a "blockchain uber" for translation / interpreting services including a pension scheme Blockchain is perfect for storage of the documents and registration of copyrights or other exclusive rights that thus can be monetized.

I know it sounds complicated but it's the only way forward.

Cheers!
Antoni
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Dan Lucas  Identity Verified
United Kingdom
Local time: 14:51
Member (2014)
Japanese to English
A perennial theme resurfaces Jan 16

antoni lesinski wrote:
The agencies are obsolete parasitic forms that need to be erradicated...
I know it sounds complicated but it's the only way forward.

If you think blockchain is the solution to freelancers getting more or better work, you probably haven't understood the problem.

Blockchain or no blockchain, nobody is forcing you to work with the agencies you so dislike. You can go out there right now, today, disintermediate those "obsolete" agencies, and find direct clients - but to do that you must be good enough at sales and marketing to get your foot in the door. To put it another way, the problem is not one of the limits of technology, but of the limits of individual freelancer competence.

Agencies, the successful ones at least, do tend to be good at sales and marketing, and at managing a business, and at coordinating a bunch of different people engaged in multiple functions around the globe. Translation is only one part of the process. That is why agencies tend to get the direct clients, while freelancers tend to work with agencies. Of course, a savvy freelancer can also work with direct clients provided that the projects involved are not too large.

TL;DR: There are some good clients and lots of bad clients out here. Be good at what you do so that you don't have to rely on bad clients for work.

Regards,
Dan



[Edited at 2020-01-16 17:32 GMT]


Kay-Viktor Stegemann
Riccardo Schiaffino
Thomas T. Frost
John Fossey
Liviu-Lee Roth
Alison Jenner
 

antoni lesinski
Ireland
English to Polish
+ ...
to Dan Lucas Jan 16

re: Blockchain or no blockchain, nobody is forcing you to work with the agencies you so dislike. You can go out there right now, today, disintermediate those "obsolete" agencies, and find direct clients - but to do that you must be good enough at sales and marketing to get your foot in the door.

Well its the agencies that forcing me to work for them actually as there are no alternatives. It is impossible for a single interpreter or at least very hard to win the market. However a pr
... See more
re: Blockchain or no blockchain, nobody is forcing you to work with the agencies you so dislike. You can go out there right now, today, disintermediate those "obsolete" agencies, and find direct clients - but to do that you must be good enough at sales and marketing to get your foot in the door.

Well its the agencies that forcing me to work for them actually as there are no alternatives. It is impossible for a single interpreter or at least very hard to win the market. However a project backed by a large group of interpreters, crowdfunded with a vision could change the market forever. Who remembers today video rentals? They were replaced by better technology. Same is with our trade. Proz is an attempt to minimise the third party. Agencies do not relay on the marketing but rather on their ability to win tenders so they compete between themselves driving the prices down. Who cares about marketing if there is demand from the public funded courts hospitals and police. So I think that blockchain more than anything else can be a solution for the future of our trade like DAOs or co-op types of organizations under the umbrella of the professional bodies.
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Dan Lucas  Identity Verified
United Kingdom
Local time: 14:51
Member (2014)
Japanese to English
A problem of budget not technology Jan 17

antoni lesinski wrote:
Agencies do not relay on the marketing but rather on their ability to win tenders so they compete between themselves driving the prices down.

So how will you combat this given that most clients actually want lower prices? What difference would blockchain make? Budgets for interpreting services will not magically change just because somebody is using (or not using) blockchain.

EDIT: we should probably take discussion of blockchain etc. to a different thread - we're distracting from the considerably more urgent issue of AB5.

Dan

[Edited at 2020-01-17 09:24 GMT]


Michele Fauble
Riccardo Schiaffino
 

Riccardo Schiaffino  Identity Verified
United States
Local time: 07:51
Member (2003)
English to Italian
+ ...
Let's take the discussion of the blockchain to a new thread Jan 19

We should probably take discussion of blockchain etc. to a different thread - we're distracting from the considerably more urgent issue of AB5.


Agree with this: I would actually be interested in an explanation (in a different thread) of how blockchain technology would actually help... I'm skeptical, but willing to consider other points of view.


Jean Chao
antoni lesinski
 

antoni lesinski
Ireland
English to Polish
+ ...
how blockchain can help Jan 21

ok, I will start a new thread about how I see this in a day or two. I am busy setting up a consortium for the interpreters at the moment.

 

nisreen14
United States
Local time: 09:51
Arabic to English
+ ...
An inquiry Jan 28

Hello dear interpreters

Based on AB5 law, what is the best solution for an interpreter resides in California to do, meaning what’s the best and easiest option to go for and doesn’t cost a fortune to do, whether registered as an S or C corporation or LLC under S/C corp? What’s the exact difference?
Please advise and share your experience. How to do so?
Thanks


 
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AB5 Bill in California: What to do now?

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