AB 83 Business licenses and fees: teleworkers. BILL NUMBER: AB 83 AMENDED 08/16/99 BILL TEXT AMENDED IN SENATE AUGUST 16, 1999 AMENDED IN SENATE JULY 12, 1999 AMENDED IN SENATE JUNE 30, 1999 AMENDED IN ASSEMBLY MAY 27, 1999 AMENDED IN ASSEMBLY MAY 24, 1999 AMENDED IN ASSEMBLY MAY 17, 1999 INTRODUCED BY Assembly Member Cardenas DECEMBER 9, 1998 An act to add Chapter 4 (commencing with Section 16300) to Part 1 of Division 7 of the Business and Professions Code, relating to business licensing. LEGISLATIVE COUNSEL'S DIGEST AB 83, as amended, Cardenas. Business licenses and fees: {- residence as place of business -} {+ teleworkers +} . Existing law authorizes cities, including chartered cities, in the exercise of their police power and for the purpose of regulation, to license any kind of business not prohibited by law transacted and carried on within the limits of their jurisdictions, and to fix the rates of the license fee and provide for its collection, according to specified criteria. This bill would prohibit any city, including chartered cities, within the County of Los Angeles from requiring a business license or home business occupation permit of, or imposing a business tax or registration fee on, any {- writer, musician, director, or other creative artist -} {+ teleworker +} , as defined, {- solely because that person receives an income for work performed at or from the person's place of residence and reports that income, as specified -} {+ for those activities undertaken as a teleworker +} . Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. SECTION 1. Chapter 4 (commencing with Section 16300) is added to Part 1 of Division 7 of the Business and Professions Code, to read: {- CHAPTER 4. PERSONS WHO ARE NOT BUSINESSES -} {+ CHAPTER 4. TELEWORKERS 16300. The Legislature finds and declares all of the following: (a) Technological developments have led to dramatic changes in the nature of work and employment, including the expansion of work-related interaction irrespective of geographical distance, and an increase in the number of persons required by their employer to engage in employment from their homes. (b) Certain cities inappropriately rely on whether Social Security taxes are withheld or how income is reported to the federal government to classify persons who engage in home-based employment for purposes of local business taxes, licensing, and permitting. For example, a payment to a common law employee may not be treated as subject to federal withholding, because of the application of the nonsubstantive exception for services rendered in connection with a single transaction and not a continuing relationship. (c) It is the intent of the Legislature in enacting this section to prevent cities from discriminating against home-based employment by improperly defining that employment as a "business." (d) The imposition of home occupation permits, business taxes, or registration fees on home-based employment is confusing and burdensome to workers, threatens the growth and maturation of home-based employment, is counterproductive to established state policies, such as the promotion of telecommuting, and may, in some instances when applied to home-based employment, violate the Constitution of the United States or the California Constitution. (e) This chapter clarifies that how income is reported to the federal government is not determinative where other facts or circumstances support the treatment of a person who works in home-based employment as a common law employee. 16305. (a) Notwithstanding any other provision of this part or Chapter 3 (commencing with Section 37100) of Part 2 of Division 2 of Title 4 of the Government Code, no city, including a charter city, may require a business license or home business occupation permit of, nor impose a business tax or registration fee on, any teleworker for those activities undertaken as a teleworker. (b) For purposes of this chapter, a "teleworker" is a person who receives a payment of a salary, wage, or fee from any individual, corporation, association, or partnership, or any agent thereof, doing business in this state, for work performed at or from the person's place of residence, if one or more of the following circumstances exist: (1) Income, Social Security, or Medicare taxes are withheld from the payment or would be withheld if the end use of the work were produced in the United States. (2) The payment is made for work that is governed by and subject to a collective bargaining agreement containing terms relating to the payor's right to control and direct the performance of specified work, or the payment results in employer contributions to a health or pension plan. (3) The payment is a royalty, residual, or similar fee for reuse, where the work was performed or distributed previously. (c) For purposes of this chapter the following definitions apply: (1) "Director" means anyone who is a member of the directorial team as that term is commonly used in the entertainment industry, and is limited to film, television and theatrical directors, first and second assistant directors, unit production managers, associate directors, stage managers, technical coordinators, and production associates. (2) "Musician" means anyone who performs musical works and includes, but is not limited to, live performance instrumentalists, recording instrumentalists, and vocalists. (3) "Other creative artist" means an individual who creates paintings, drawings, graphic art, cartoons, sculptures, stained or leaded glass, or other works of art. "Other creative artist" also includes, but is not limited to, performers, dancers, stunt performers and coordinators, voice-over artists, and motion picture and television film editors, production designers, art directors, and assistant art directors. (4) "Person" means a director, musician, other creative artist, or writer, where the circumstances described in subdivision (b) exist. (5) "Writer" means anyone who creates and originates or contributes revisions, modifications, or changes to works existing in a tangible medium of expression derived from his or her intellectual labor, including, but not limited to, literary material for theatrical or television motion pictures, journalistic works, musical works including musical compositions and lyrics, dramatic works, pantomimes, choreographic works, audiovisual works, or sound recordings. (d) A city may broaden its definition of "teleworker" to include individuals who are not already defined in this section. 16310. Nothing in this chapter shall be construed to limit a city's authority to adopt and enforce ordinances, including those affecting zoning or business licensing, that define or regulate the operation of home-based businesses. Notwithstanding any other provision of this chapter, an ordinance may make a teleworker subject to zoning, business licensing, or ordinances if the teleworker does any of the following: (a) Operates under a fictitious business name, except if the fictitious business name is established for the purpose of receiving royalty income. (b) Has employees engaged in performing the work activity at the teleworker's place of residence. (c) Works with hazardous materials, as defined in Section 25501 of the Health and Safety Code, or otherwise engages in a prohibited activity in a residential zone. (d) Engages in work activities that contribute noise, traffic, or other similar characteristics that have a negative impact on a neighbor's quiet enjoyment of his or her home. 16315. This chapter applies only to cities, including charter cities, in a county of the first class. SEC. 2. Due to the unique circumstances of the population of a county of the first class, a high percentage of which consists of persons engaged in home-based employment who receive income for work performed at or from their places of residence, the Legislature hereby finds and declares that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution. Therefore, the special legislation contained in Section 1 of this act is necessarily applicable only to cities within a county of the first class. +} {- 16300. (a) The Legislature finds and declares that the Internal Revenue Service has recognized in its publication, "MSSP Entertainment -Important 1040 Issues," that employees of the entertainment industry are characterized by many unique taxpayer issues. The Legislature further finds and declares that some cities consider certain persons employed in the entertainment industry to be "businesses" notwithstanding that those persons actually have many of the traditional characteristics of employees. It is the intent of the Legislature in enacting this section to make uniform the municipal tax treatment of persons who are writers, musicians, directors, and other creative artists who engage in literary or creative activities at or from their residences. This section provides clarification of certain characteristics intended to define, for the purpose of local business taxes and licensing, those persons who are businesses and those who are not. (b) Notwithstanding any other provision of this part, no city, including a charter city, within a county of the first class may require a business license or home business occupation permit of, nor impose a business tax or registration fee on, any writer, musician, director, or other creative artist solely because both of the following occur: (1) That person receives income for work performed at or from the person's place of residence. (2) That income is reported to the Franchise Tax Board upon an Internal Revenue Service Form 1099. For purposes of this section, income for work that is reported on a Form 1099 is deemed to be employment income, and not business income, if any of the following is true: (A) The payer contributed to the worker's health or pension plan for the performance of that work. (B) The payment for the work is pursuant to the terms and conditions of a collective bargaining agreement. (C) The income is royalty, residual, or other reuse payment for work that was previously performed. (c) Nothing in this section shall be construed to limit a city's authority to adopt and enforce ordinances, including business or zoning ordinances, that define and regulate the operation of home-based businesses. Those ordinances may conclude that a person performing work at or from the person's place of residence is a business because one or more of the following is true: (1) The person operates under a fictitious business name, except when the fictitious business name is established for the purpose of receiving royalty income. (2) The person has employees engaged in the activity. (3) The person works with hazardous materials. (4) The person's work activities contribute noise, traffic, or other characteristics that would negatively impact a neighbor' s quiet enjoyment of his or her home. (d) For the purposes of this section, the following definitions apply: (1) "Director" means anyone who is a member of the directorial team as that term is commonly used in the entertainment industry, limited to film, television and theatrical directors, first and second assistant directors, unit production managers, associate directors, stage managers, technical coordinators, and production associates. (2) "Musician" means anyone, other than a cafe musician, as defined in Section 16000.5, who performs musical works and includes, but is not limited to, live performance instrumentalists, recording instrumentalists, and vocalists. (3) "Other creative artist" means a person who creates paintings, drawings, graphic art, cartoons, sculptures, stained or leaded glass, or other works of art. "Other creative artist" also includes, but is not limited to, performers, dancers, stunt performers and coordinators, voice-over artists, and motion picture and television film editors, production designers, art directors, and assistant art directors. (4) "Writer" means anyone who creates and originates, or contributes revisions, modifications, or changes to, works existing in a tangible medium of expression derived from his or her intellectual labor, including, but not limited to, literary material for theatrical or television motion pictures, journalistic works, musical works including musical compositions and lyrics, dramatic works, pantomimes, choreographic works, audiovisual works, or sound recordings. SEC. 2. Due to the unique circumstances of the population of a county of the first class, a high percentage of whom are creative artists who receive income for work performed at or from their places of residence, the Legislature hereby finds and declares that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution. Therefore, the special legislation contained in Section 1 of this act is necessarily applicable only to cities within a county of the first class. -} Searching keywords: (statusam) (authorCardenas) (HooA)