California’s Translators and Interpreters Scramble to Contain Damage Caused by AB5

Just days after California gig worker bill AB5 went into effect, the bill’s lead author, State Assemblywoman Lorena Gonzalez, said in a January 10, 2020 interview that she had heard from many freelancers saying they are happy with the bill and the resulting job offers.

“We have companies that are hiring translators directly,” Gonzalez said in the same interview, responding to a January 1, 2020 report on Greek medical translator Mary Konstantinidou’s experience with AB5.

Brian Fowler, SDI Media SVP of Operations, Americas, told Slator, “There are a few instances in which we may hire a resource as an employee, but this option depends on the resource’s proximity to our office, percent of work done for SDI, lack of established business, and willingness to become an employee.”

Fowler explained that the last condition can sometimes be problematic.

“Some within the translator community do not seek employment for a variety of reasons, such as flexible hours, remote location, higher volume/earnings via multiple sources, tax implications, etc.,” he said.

Since Slator’s December 2019 report on AB5, freelance translators and interpreters have continued to share their personal accounts of contracts threatened or canceled due to the controversial bill.

Linguists commiserated and brainstormed in a December 18, 2019 ProZ forum titled, “AB5 Bill in California: What to do now?

Yoonkyung Walters, a Korean translator based in Long Beach, California, started the thread after receiving an email from a client, a language service provider (LSP), “asking me to register myself as C corp or S corp by the end of this year (as if it’s something that can be taken care of in two weeks). Otherwise, they can’t work with me anymore beginning 1/1/2020.”

The LSP’s request reflects some of the confusion surrounding AB5.

“If there’s an individual who’s freelancing for multiple organizations, who truly is a small business, it’s in the bill that they can continue to do that,” Gonzalez said in the January 10, 2020 interview.

According to Gonzalez, the options include sole proprietorship, “which doesn’t cost a cent,” or forming an LLC. Although the latter normally comes with an annual tax of USD 800; that fee will be waived this year.

Some independent contractors are moving in this direction. German translator Marion Rhodes tweeted on January 7, 2020, “Today, I registered my translation business as an LLC in hopes of escaping the ramifications of this awful law. If that helps remains to be seen. Tough time to be a translator in California!”

Despite Gonzalez’s assertion that AB5 permits employers to engage the services of sole proprietors, Hungarian translator Ildiko Santana has found that obtaining such a business license in December 2019 has not been enough for some clients — including TransPerfect, the world’s largest LSP by revenue and Santana’s client for over 10 years.

According to a December 12, 2019 email Santana received from TransPerfect, “Although AB-5 allows for various types of business entities, TransPerfect’s policy requires its contractors to be a corporation (either a C-corporation or an S-corporation) and that the name of such corporation includes one of the following words: ‘Inc.’, ‘Incorporated’, ‘Corp.’ or ‘Corporation.’ This letter is sent as notice that beginning January 1, 2020, TransPerfect will not engage an individual person, or any entity other than a corporation, as a contractor if such contractor is based in or resident of the State of California.”

In a January 6, 2020 tweet, Santana shared a follow-up email from TransPerfect which reiterated that the LSP “will not be able to remit any funds until you are in full compliance with our 2020 TransPerfect Vendor Policy. […] Full compliance includes your submission of your certificate of incorporation with the CA stamp, new W9 complete with FEIN or EIN, and a new ICA.”

Santana said that forming a C corporation or S corporation is not an option for her at this time.  “I am unable to bear the financial and administrative burden of such an arrangement, especially now that I am not receiving any significant assignments from US clients,” she said.

https://twitter.com/Ildiko_Santana/status/1214288657537892352

Madeline Ríos, a Spanish translator and interpreter who specializes in case law and already owns her own small business, told Slator that she received “some onerous contracts in late December. One of them had language under which I would assume liability for any taxes, contributions that they haven’t paid or penalties imposed on account of keeping me as an independent contractor.”

Hungarian translator Peter Gergay, whose clients are mostly located outside California, told Slator that starting December 2019, certain LSPs had explained, in no uncertain terms, why they can no longer work together. “One client inquired about my availability and after I answered in the affirmative, they told me that they cannot work with me because I am now regarded as an employee living in California and they cannot have an additional employee,” Gergay said. He added that, not long after, he received “an identical message” from another client.

The Case for a Carveout

The Coalition of Practicing Translators and Interpreters of California (CoPTIC) continues to advocate for an exemption (or “carveout”) from AB5 for language professionals against the backdrop of discontinued working relationships.

In a January 7, 2020 tweet, CoPTIC shared excerpts of termination notices received by independent contractors, including messages from clients declining to work with sole proprietors in California.

The organization has invited translators and interpreters to a briefing in Monterey, California on January 30, 2020, where leaders plan to answer questions on CoPTIC’s advocacy efforts.

Dieter Runge, VP of Marketing and Global Business Development at San Francisco-based interpreter platform Boostlingo, told Slator that his team has been in contact with CoPTIC in support of their efforts. Runge and a colleague have also participated in lobbying events in DC coordinated by two sister organizations, the Joint National Committee for Languages and the National Council for Languages and International Studies (JNCL-NCLIS).

Advocates for freelancers are also keeping an eye on proposed legislation that could change the work status of independent contractors on the East Coast.

The New York Senate referred state bill S6699A, which establishes criteria for determining whether paid work should be considered employment, to the State Labor Committee on January 8, 2020.

New Jersey lawmakers pushed back voting on bill S4204, an update to state labor laws that expands the definitions of employees versus independent contractors, until sometime during the two-year legislative session that started January 14, 2020. The bill still requires full State Senate and Committee approval.