Independent Contractors Verses Employees…Why Does It Matter?

As housing providers, we need the services of plumbers, painters, electricians, and so many others to keep our buildings running smoothly. Are the vendors that you hire employees or independent contractors and why does it matter to you?

THE DIFFERENCE BETWEEN INDEPENDENT CONTRACTORS AND EMPLOYEES

In 2019. Governor Newsome signed into law AB5 which introduces the “ABC test” The ABC test is used to determine whether a worker is an employee or an independent contractor.

1) The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

2) The worker performs work that is outside the usual course of the hiring entity’s business; and

3) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

WHY IT MATTERS
If your handyman, plumber, or painter is judged to be an employee, it could create a whole new list of expenses for you as a property owner. I am not an attorney and as a real estate broker, I never want to give legal advice, but merely I want to give you a “heads-up” to make sure that you are on the right side of this law. A call to your real estate attorney and to your apartment association would not be a bad idea. AB 5 took effect in January of 2020 and does not allow for any grace period.

UMBRELLA POLICY?
Additionally, it is always a good idea to check with your insurance agent to make sure you are covered in case of injury to tenants or workers while on-site at your building. In most cases, you will probably be able to continue operation as you have in the past, but with new legislation coming in all the time, it is always good to be vigilant.

“If you quit once, it becomes a habit. Never quit.” Michael Jordan

What we at PRS PROPERTIES CAN DO. We can also give you a good idea of what your building would sell for in its present condition. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other changes that might allow you to get a higher value in order to create value without huge expenses for your building. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, a moratorium, or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are in 1031 exchanges and need to identify a replacement property before their 45-day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted, and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.

Remember – KNOWLEDGE IS POWER!