The implications of AB 5 are far reaching beyond the intended gig business targets. We’ll see what the new year brings for independent contractors in the legal services industry. California Assembly Bill 5 (2019) took effect January 1, 2020. The bill was introduced by California assemblywoman Lorena Gonzalez then was signed by Governor Gavin Newsom on September 18, 2019.
Many California Freelance Paralegals have already felt AB5's impacts. While Lawyers are exempt from Labor Code §2750.3, Paralegals are not. What does this mean? In scenarios where the ABC Test (which is based on Dynamex) would be used to determine whether a Paralegal is an independent contractor or employee instead Borello would be considered which is far more complex.
Both the Borello test and the ABC test assume that the worker is an employee and the hiring entity must prove that the worker is an independent contractor.
Under Borello, no single factor determines whether a worker is an employee or an independent contractor. So to say doing business as a sole proprietor would be enough to rebut the presumption based on a B2B exemption is not solid enough for me. More importantly, would it be enough for the lawyer you’re hope to contract with.
An inescapable factor considered under Borello is the degree of control and direction required in the Lawyer-Paralegal relationship. BPC §6450 et seq. clearly spelled out, Paralegals perform all services under the direction and supervision of an attorney.
Another factor is whether the work is a regular or integral part of the employer’s [lawyer’s] business, which obviously it is.
Remember, the point of AB5 is to impose an employer-employee relationship. Borello is a “multifactor” test which requires consideration of all potentially relevant facts in the determination whether an exemption exists. No single factor controls.
It is my humble recommendation that LDAs support Freelance Paralegals.
According to Forbes, California Paralegals average salary in 2018 was $61,240. Apparently, California Paralegals earn $6,740 more per year than the national average annual wage of a paralegal at $54,500.
I would say this article doesn't account for factors such as areas of law, size of the first along with other critical demographics. For example, a California Paralegal working in San Francisco for a firm practicing in technology transactions is going to very significantly from that of one in Woodland handling family law.
Read more and decided for yourself.
The State Bar of California Task Force on Access Through Innovation of Legal Services (ATILS) January 8, 2020 - Recommendations Issued for Public Comment Concerning Exceptions to the Unauthorized Practice of Law, including Consideration of Concepts for Regulation.
These are just first round if recommendations. The proposed guidelines have may revisions to come and hurdles to jump the fist of which will be published March of 2020. The ATILS Task Force is open to public comment.
The fact that the new Independent Paralegal category will eliminate LDAs either in direct competition or via osmosis is inevitable. I rather it be the latter. It is my humble opinion that Legal Document Assistants lobby for a grandfather clause for inclusion if and when this new category takes effect.
"In an effort to streamline and stay in alignment with current regulatory frameworks, the task force does not recommend developing a brand new certification program or licensing model but rather to take advantage of an existing educational program; specifically the paralegal...
This recommendation seeks to create an additional category of paralegal called an “Independent Paralegal” who would be authorized to provide [limited] legal services in a specific area or areas of practice in which they are registered without attorney supervision pending compliance with specific educational, experience, ethical and certification requirements.”
ATILS Task Force proposed guidelines are as follows:
An IP would be a paralegal who:
Source: 01/08/2020 B.1. Recommendations Issued for Public Comment Concerning Exceptions to the Unauthorized Practice of Law, including Consideration of Concepts for Regulation http://board.calbar.ca.gov/docs/agendaItem/Public/agendaitem1000025310.pdf
"[Limited License Legal Technicians] (LLTs) are an important piece of [closing the access to justice gap] and it’s the think[ing] around them, that we have been innovative enough to create a tier that never existed before in the history of law in this country. And there’s probably more jobs, descriptions, opportunities for us to create professionals, preferably regulated, as part of our large profession.
States with Non-Attorney Professionals:
Legal Document Assistants
Unlawful Detainer Assistants
Bankruptcy Petition Preparer
Legal Document Preparers
Certified Legal Document Preparer
More info can be found on the NFPA website, where the association provides a comprehensive list of Paralegal and Non-Lawyer Regulation by State: