Saturday, October 12, 2019

New CA Law Changes Status of Independent Subcontractors

At the BSC Summit in Pittsburgh this week I heard it said over and over “What happens in California always migrates East.”
Let’s hope not in this instance. California Gov. Gavin Newsom recently signed Assembly Bill 5 where employers will be required to use a strict method, called the ABC test, to determine if a worker is either an independent contractor or an employee entitled to the protections and benefits into law. At the present time most general contractors that use state approved subcontractors will see little or no effect on their business but rest assured once California regulators begin looking more closely into the subcontractor side of our industry, we will begin to see general contractors being put under the regulatory microscope. If the subs are forced to make changes in how they do business and have to raise their costs to GC’s, who knows what costs will be passed onto the developer and new home buyer. Home builders in CA are pulling back from new construction caused a slowdown in permits simply because it’s become harder to make money building homes within the state. Builders cite the high costs for land, labor, materials, government regulations and if that isn’t enough, this new law can only increase those costs. Let’s hope, just this once, that “what happens in California stays in California.”

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