California MLM Independent Contractor Bill Amended

    Kevin Thompson is an MLM attorney, proud husband, father of four and a founding member of Thompson Burton PLLC. Named as one of the top 25 most influential people in direct sales, Kevin Thompson has extensive experience to help entrepreneurs launch their businesses on secure legal footing. Recently featured on Bloomberg TV and several national publications, Thompson is a thought-leader in the industry.

    California Senate Bill, the specific bill written about on this site earlier regarding independent contractor reporting requirements in California, has been amended! Through the efforts of the DSA, the teeth behind the bill have been removed. In its original form, the bill would have required distributors to provide and maintain burdensome records about each downline participant enrolled for a two year period. Violators could have been prosecuted for a misdemeanor. Clearly, this was a ridiculous requirement.

    The bill has been recently amended, eliminating the problematic terms for direct sales companies. Read the DSA’s release about the victory over the California independent contractor battle. Excerpts are included below:

    Thanks to the dedication of DSA member companies and the industry’s government relations Road Warriors, the California Senate, on a 22-13 vote, passed an amended version of Senate Bill 459 last Friday eliminating a burdensome notice requirement for companies relying on independent contractors—including direct sellers—proposed in the original bill.

    The original version of California Senate Bill 459, championed by California Senate Majority Leader Ellen Corbett (D), would have required companies that rely on independent contractors to issue a statement detailing the impact of the individual’s status as an independent contractor on his or her tax obligations and eligibility for labor employment protections. While such notification is already part of the written contract a seller must sign before becoming affiliated with a direct selling company, the additional requirements would have posed a threat to the industry’s ability to recruit and retain salesforce members. Additionally, under the original bill, any independent contractor who failed to file or keep the proposed paperwork could have faced misdemeanor charges.

    While all members of the California Assembly received a letter from 28 DSA member companies with a physical presence in the state, more than 1,200 independent California direct sellers wrote to their state representatives expressing their concerns about the legislation. Additionally, DSA member companies and staff met one-on-one with legislators who also received more than 2,400 emails from California distributors about the bill.