Someone emailed me about Assembly Bill 5 which is a California law currently. This bill limits the use of classifying subcontractors as independent contractors rather than classifying them as employees.
Employees are entitled to more labor protections such as sick leave, minimum wage, unemployment, workman’s comp, and more.
Companies such as Lyft, DoorDash, and Uber agreed to spend millions for a ballot initiative to oppose this bill.
As most bills that are socialist in nature, the premise is to “help” workers. But, the result is to make it very expensive and cumbersome to hire local workers. The advent of unions made it prohibitively expensive to hire domestic workers which resulted in lots of outsourcing. In the long run the unions did more harm than good for the workers. Assembly Bill 5 results in compromising American freedoms such as the right to form your own agreements and contracts with paid help. Many companies with particular business models will no longer have the freedom to decide whether to hire someone as a contractor or employee and face the risk of being penalized by the state.
So, how does this affect mobile notaries? Mobile notaries must now pass a strict level of qualifications to be considered independent contractors. They must meet all three conditions.
1. The worker is free from the control and direction of the hiring party in connection with the performance of the work, both under the contract for the performance of such work and in fact
2. The worker performs work that is outside the usual course of the hiring entity’s business
3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity
COMMENTARY
Title companies that hire notaries often hire more experienced notaries who do not need any hand holding. However signing companies are famous for micromanaging notaries, telling them what to do and how to do it, and requiring lots of fax backs. Signing companies are violating stipulation #1 in the list of requirements of having independent contractors. Additionally, signing agents, do signing work which is not outside the usual course of what a signing company does. That is their main type of work and not something outsourced like accounting or computer repair. As far as condition #3, most Notaries do Notary related work for many different hiring parties, so although they may or may not pass condition #1, definitely don’t pass #2, the will pass condition #3.
SUMMARY
Will this mean that Notaries in California can no longer function as signing agents without being put on payroll? Would this be good or bad? I think it is a disaster and this bill is another milestone in the end of American freedom and the onset of socialism or communism in America (boo). But, what if signing companies outside of California hire signing agents within California? Can the state of California still sue them or penalize them for not following local rules? Maybe companies will have to hire full time and part time on-call employees to do their bidding. There is a company in Missouri that already does this on their own free will — notice that I said free will. Forcing this business model on companies is just not nice. It might also be disastrous for the directory business.
On a brighter note, maybe most signing agents and signing companies will ignore this rule and not get into trouble. After all, to enforce this rule requires attorneys and they do not work for cheap.
Personally I feel this bill is intrusive, a violation of our freedoms, and counterproductive. It will lead to a lot of unemployment, poverty and misery all under the guise of wanting to make downtrodden people’s lives better by having lots of artificial restrictions on employment.
As you are located in CA, please let your thoughts be known to the CA legislators, if you haven’t already done so.
Comment by Ardel Richter — April 13, 2020 @ 1:43 pm
Signing agents are nothing but a cancer, and un-necessary middlemen. Most exist , because there is some senior employee in the title company is hiring his relative or friend and there could be kickbacks involved.
This law might be a good thing. As lot of notaries are barely making ends meet, this might create a new position as a closer EMPLOYEE and might give them a steady income.
So all those part time notary stragglers might end up with no part time income , while some of them might gain full time.
WHat sort of loss of jobs are you talking about? All the Title Closing jobs might be concentrated in a few EMPLOYED NOTARIES.
THat could be a good thing. This means, employers will only seek GOOD & EXPERIENCED NOTARIES.
JEREMY, you have yourself been trying to weed out those “UNQUALIFIED” notaries.
Isnt that your pet peeve.
What did CONTRACT EMPLOYMENT Provide to notaries? Low wages, Unpaid and stifled mptaroes. Signing agencies, micromanaging for one thing or another.
LOOK UP IRS code for what fits to be an employer and what fits to be a contractor. Micromanaging is actually a definition of employer.
FREE MARKET IS ANOTHER TERM FOR ” THe STRONG AND INTELLIGENT who prey and exploit the WEAK & STUPID”
Comment by Ray Diallooooo — May 6, 2020 @ 5:39 pm
Can you say RON? This is the future.
I am RON certified within my State.
Comment by Jean Meyer — May 6, 2020 @ 5:50 pm
I believe Lorena Gonzalez introduced AB5 to help Uber/Lyft drivers not realizing how it would affect hairdressers, Notaries, etc..
I 100% agree with your assessment.
Thanks for posting.
Comment by Jim Morgan — May 6, 2020 @ 6:40 pm
You have the right to express your opinions. I don’t agree with them. I gather you’d rather that business run this country rather than the people and their deleted officials.
Comment by Miguel Buchwald — May 6, 2020 @ 6:48 pm
This would be HORRIBLE for signing agents. I run a signing agent team, and work very hard to help provide the best possible service to my clients aka title agencies. Myself and my teammates make more as independent contractors than any title agency is willing to pay to full time employees. Myself and my group would all take a pay cut, and that’s assuming that all of us could actually find full time positions. Not to mention, the whole reason that signing agents exist is because the cyclical nature of this business does not justify title agencies hiring full time people for year round work. It simply isn’t there. In my opinion, all this would do, is create longer closing timelines due to reduced staffing. Thanks for posting and bringing this to my attention. I will be doing my best to speak to my local officials to let them know the negative impact this would have on my business.
Comment by Dawn McCloud — January 11, 2021 @ 7:29 pm
I did write to NNA, which is the one that is trying to have the notaries removed from this law. Address it to Lorena Gonzalez,
Comment by Guadalupe Ruiz — January 11, 2021 @ 8:01 pm
HA You didn’t know this would happen? You put socialists/elitists in power! Watch your taxes go up and your income go down. Reap what you sow!
Comment by Cheryl — January 11, 2021 @ 9:00 pm
AB 5 was passed because there were employers who were making their employees work as IC’s rather than employees to save on payroll taxes, 941 reporting, etc. Unfortunately, the side effects of this law encroached upon industries where IC’s were commonplace and not a problem. Rather than draft a law that attacked the actual problem, a wide-sweeping law that encompasses everyone was written and passed. We are now seeing this hastily created action being undone through various “exceptions” either passed by state legislative action, or voter propositions. Independent notaries are just that..INDEPENDENT. We aren’t employees of the Notary signing companies even though rules are set down that we have to follow. Most of these “rules” have their basis in the law anyway. When we contract to do a signing, we accept the T&C of the job, including the fax back. I don’t accept the low fees offered by the signing company. I always counter with a higher amount. They are fee to accept or reject my fee. If they reject, they have to keep searching for a notary.
Comment by Robert Dibbell — January 11, 2021 @ 9:03 pm
First, I would like to point out that it’s not title companies that hire notaries it is escrow officers. Must escrow officers are also notaries, not well trained.
Overall the industry has been degraded and undermined by escrow and also lenders and borrowers who feel the fees are too high, without considering the fees the mobile notaries encounter to do their job. It’s a frustrating juxtapoint.
I’m a notary and loan signing agent, but also now work in the capacity of operations for a private lender and see all the struggles. Many times, escrow doesn’t even have the instructions right for the lender to close the deal but then they go back to the notary to fix the problem that they caused. I don’t want to sound like I’m hating on escrow officers, because there are many I choose to work with, but I feel like if everybody paid attention to the instructions and move forward it would be seamless given all the checklist and instructions I make sure to provide.
Given the legislation in California, there’s no real hard line on contract work versus employment. The industry should go on as planned from a legislative perspective however it’s vague when it comes to virtual. I don’t know I’m kind of at a loss for this industry and it makes me sad.
Comment by Monica Rachelle Johnston — June 24, 2021 @ 3:32 am