Re: AB5 goes into effect January 1

Subject: Re: AB5 goes into effect January 1
From: Lauren <lauren -at- writeco -dot- net>
To: techwr-l -at- lists -dot- techwr-l -dot- com
Date: Fri, 20 Dec 2019 16:13:26 -0800

There is a problem in the law that I am certain will be challenged in litigation.

(2) For purposes of this subdivision:
(A) An âindividualâ includes an individual providing services through a sole proprietorship or other business entity.

It seems like the law is attempting to go after incorporated ICs when it defines "business entity" as an individual. If the government tries to attach labor law to a single-person business entity (LLC, Corp, etc.) it will cut into that freedom of contract doctrine in the U.S. Constitution. As I stated it in my previous email, AB5 will apply to employees who work for their own corporation. AB5 should not apply to the contracts formed by the business entity with a client but there will likely be litigation to clarify how far the government may go.

Regardless of what happens with the law, ICs who derive substantial (or close enough) income from freelance work or independent consulting should form a formal business entity and work under that entity for protection from litigation, tax benefits, and freedom to enter legal, non-violent contracts without government intrusion. Plus, having a company makes it easier to hire help and piecework.

Carrying a $1 million insurance policy is also a good idea and some clients require insurance. The policy should cover errors and omissions but it can also include other things for the business. Errors and omissions are things that an IC can do to the client's stuff. Businesses have been sued for missing commas and that is not something a technical writer wants to pay for if the business decides the TW is at fault.

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