Employee or Independent Contractor?

Tails Up shuts down: Owner cites daunting independent contractor regulations 

The Napa Valley Register reports that a pet sitting business closed because of the requirements of AB5, the California law that requires business owners to meet the ABC test to classify their workers as independent contractors. In fairness, pet sitting businesses usually are able to meet most tests for classifying workers as independent contractors. The Napa Valley Register reports:

After three years of providing pet care for four-legged customers, Tails Up! Napa Valley is closing its doors.

Melodie Durham, owner and founder of Tails Up, said that unlike some small businesses, hers did not close primarily due to COVID-19 impacts.

Instead, her business suffered under the requirements of a new law regarding the use of independent contractors.

The in-home pet sitting services offered by the Tails Up team provided a alternative to boarding facilities or relying on family or neighbors to check on pets, said Durham.

“Our sitters, all vetted, bonded and insured, were able to care for client’s pets in the clients (and the pet’s) own home,” she said.

“This eased the stress that can come when pets are separated from their owners. I also provided licensed and insured boarding care in my home.” In fact, her backyard with pool, became known as ‘Lab Heaven.’”

When Durham started the business in the fall of 2017, she used a model similar to those used by most pet care service providers throughout the United States. She used independent contractors.

She carefully researched her business model, said Durham. She took classes through the Small Business Development Center at Napa College. She became a member of Pet Sitters International. She researched and spoke with several other pet care business owners.
“It became clear that it would not be possible for me to utilize employees in our business model,” said Durham. It would have been cost prohibitive. Figuring hourly minimum wage plus the additional cost for workers’ comp and taxes, “I literally would have had to charge a client $215 for a sitter to stay one night in the clients home!”

And as it turned out, Durham said, her sitters liked being independent contractors.

“Most of our sitters were college kids and they could set their own schedules according to their classes. They didn’t want to be employees and since most of them were still living at home and were covered by their parents’ insurance it worked out well for all of us.”

Then came AB-5, a bill authored by Lorena Gonzalez, (D) California State Assembly member from San Diego. It amended existing code to expand on the criteria used to determine if workers should be classified as employees or independent contractors.
“To put it simply, this new law killed my business,” Durham said.

Read the full story at Tails Up shuts down: Owner cites daunting independent contractor regulations | Business | napavalleyregister.com

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