If you’re an entrepreneur looking to launch a MLM startup in the state of California, or if you’re a distributor there, this is very important information. There’s currently a bill on the floor in California titled “Senate Bill 459.” It’s also been referred to as the “Worker Classification Bill” (click here for the actual proposed bill…pertinent info on page 4, section 2). The bill is stupid government bureaucracy, plain and simple. Basically, MLM companies with distributors in California would need to require their distributors to provide additional forms to new people. If a distributor fails to provide these forms and/or fails to maintain them for a two year period, they could be prosecuted for a misdemeanor if the state requests the forms. Essentially, the California government is trying to keep its finger on all independent contractors so they can keep better tabs for state taxes. It’s burdensome, unnecessary and it would dramatically inhibit a company’s ability to grow in California. If you’re a distributor in California or a business owner, the below letter is a draft letter. It’s time to go grassroots. Use the text below as a template.
California Direct Selling Companies Oppose Senate Bill 459 – Worker Classification
Dear Members of the California Assembly:
On behalf of the 2 million California direct sellers and the more than 50 direct selling companies with facilities in California, we urge you to oppose Senate Bill 459 unless amended to protect direct sellers.
Nearly 90% of California’s 2 million direct sellers are women. For many, direct selling is a source of supplemental income and personal independence. The flexibility of direct selling is key to making this business model one that can meet the needs of a diverse group of Californians, each with their own personal goals and motivations. Senate Bill 459 would subject these microentrepreneurs to unnecessary and burdensome notice and recordkeeping requirements.
Direct selling companies support accurate worker classification and already inform independent contractor direct sellers of their status as envisioned by Senate Bill 459 by virtue of existing business practices and documentation. Federal and state laws (Internal Revenue Code Section 3508 and California Unemployment Code Section 650) also recognize direct sellers as independent contractors. These laws already require direct selling companies to give notice to prospective direct salespeople of their independent contractor status within their written contracts. The requirements of Senate Bill 459 are therefore redundant and confusing and would not improve the accuracy of worker classification for direct sellers.
Direct sellers have a thorough, complete, and accurate understanding of their independent contractor status, by virtue of existing law and the ample information given by direct selling companies. Moreover, direct sellers could be prosecuted for a misdemeanor if they forget to provide a superfluous Employment Development Department form on independent contractor status. The additional paperwork requirements and the threat of prosecution for a clerical error will discourage direct sellers from expanding their teams, harming untold numbers of Californians who will not have the opportunity to meet their personal and financial goals through direct selling.
In these difficult economic times it makes no sense to subject direct sellers, who have always been properly classified as independent contractors, to new burdens that will disrupt a vibrant business model that affords millions of Californians the opportunity to supplement their family income.
Why make these times harder for people who are trying to make ends meet?
We urge you to oppose S. 459 as currently drafted.