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Govenor Signs Bill Authorizing Study of Practices that Discourage Companies from Contracting with Micro Businesses

NAWBO-California Sought AB 1643 to Focus on State's Labor Classifications

October 1, 2004
Contact: NAWBO California, 1.888.629.2622

Sacramento, CA - The problem of state labor misclassifications that discourage businesses from teaming together will be studied by the state after an Assembly bill sought by the National Association of Women Business Owners - California (NAWBO-California) was signed Tuesday, September 28, by Gov. Schwarzenegger.

"NAWBO-California celebrates a hard-won legislative victory, having brought this issue before the state legislature, worked hard for its passage and sought the Governors support," said Jerri Hemsworth, President of NAWBO-CA, a business group representing more than one million women business owners statewide.

"The study will shed much needed light on this problem and provide data that backs up our assertion that the state's existing labor classification procedures harm the ability of companies to work together and, ultimately, put a damper on state economic growth," added Hemsworth, CEO of the Woodland Hills advertising and brand development firm, Newman Grace, Inc.

NAWBO-California had sought legislative relief after discovering that many women-owned and other companies that teamed together on large projects often found themselves facing extensive state audits, fines, attorney's fees and back taxes. The reason was that state officials insisted on viewing the companies and the independent consultants they used as employer and employees. The practice discouraged other firms from partnering on projects.

Realizing that ad hoc partnerships were a key factor in how businesses now work together and that these partnerships foster economic growth, NAWBO-California worked with state Assemblyman Mark Ridley-Thomas (D-Los Angeles) to create Assembly Bill 1643.

The measure requires that the Employment Development Department (EDD) conduct a six-month study and report to the Legislature by July 1, 2006: 1) the number of small-business owners who have objected to being classified as employees in the past five years; 2) the number of those found to be independent contractors and 3) the length of time it took EDD to make final findings in each case.

Read more:
Case Study for AB 1643

About NAWBO-California

The National Association of Women Business Owners - California (www.middleastwomen.org) is a consortium of nine NAWBO chapters throughout the state of California advocating for the issues and interests of more than 1 million women-owned businesses with 1.4 million employees and $400 billion in sales.

For more information on NAWBO-California or to obtain more examples of businesses harmed, please call 1.888.629.2622, or email [email protected].

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