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Impact On Notaries Unclear Amid New California ‘Independent Contractor’ Law

ca-flag-resized.jpgOn January 1, 2020, California companies will face a new, more stringent test to determine if their workers should be classified as employees or independent contractors. This sweeping labor law change was primarily meant to secure protections for “gig economy” workers — like Uber and Lyft drivers — by ensuring them a minimum wage, overtime, workers' compensation, and unionization rights, among others. The change could affect an estimated 2 million workers statewide.

But this new law, enacted as AB 5 and signed by Governor Gavin Newsom in September, has actually raised more questions than it has answered. From Silicon Valley to the agricultural industry of central California, businesses and corporations that have worked with freelancers for decades are struggling to understand what this means for them and the people they hire.

Here at the National Notary Association, we have received numerous calls and emails from California Notaries, particularly mobile Notaries and Notary Signing Agents, wondering if it will impact them.

Our experts have thoroughly reviewed the new law and the new “ABC” and business-to-business contracting relationship tests and, as it stands now, we find ourselves in the same position as most other industries: There is no clarity on its impact on Notaries. We firmly believe, however, that Notaries who have been in business for themselves as independent contractors should be allowed to remain that way.

We will be reporting any updates on this issue in the Notary Bulletin and on our social media channels as they develop. But in the meantime, our experts have gleaned some observations and insights on AB 5, which include:

The “ABC” Test and Business-to-Business Contracting Relationships – The new law redefines how independent contractors are classified by applying a 3-pronged test. In simple terms, a hiring employer must demonstrate that an independent contractor:

  1. Is free from the hiring employer’s control
  2. Performs work not central to the hiring employer’s business; and
  3. Has an independent business in their industry.

There are also tests for legitimate business-to-business contracting relationships. Those most affected include rideshare workers, truck drivers, commercial cleaning services, unlicensed manicurists, land surveyors, campaign workers and more.

Exemptions – Exemptions include most medical professionals, attorneys, insurance brokers, accountants, travel agents, graphic designers, freelance writers, estheticians, tutors and more. Notaries are not specifically mentioned anywhere in the statute.

Notary Signing Agents and Mobile Notaries – Here is where the issue gets murky. If you handle signings for only one title company or client, it could be argued that you should be an employee of that company under the “ABC” test. If you work for multiple entities things get more complicated. More than 70 percent of full-time mobile Notaries and NSAs report that they average between 5 and 15 signings — for as many as five different companies — in any given week. It’s likely that Notaries in this class could meet the requirements for legitimate business-to-business contracting relationships and, therefore, would be exempt from the new law’s requirements.

Office and Retail Notaries – Most California Notaries are already employed by a company in an office or retail environments like banks, law offices, title companies, insurance agencies, and mailbox stores. If you are one of these Notaries you will likely not be impacted, as you are already a company employee. It could get more complicated, though, if you perform notarizations outside of the workplace.

New Legislation or Rules Likely – Because of the questions and lack of clarity in the items above, we predict there will be challenges to AB 5 in 2020, which could result in updated rules, amendments or possibly even new legislation to add further exemptions.

Phillip Browne is Vice President of Communications for the National Notary Association.

10 Comments

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Brad Lee Clements

30 Sep 2019

Going to be hard to say that a notary, hired by a signing service, Performs work not central to the hiring employer’s business.

Beth

30 Sep 2019

As a Signing Agent we often sign contracts with companies that direct our business practices including how we should dress. Additionally Signing Companies that have a primary business of providing accomodation signings seems to fall into the category of an employer under this new law. This is sticky and I know that the NNA has not always wanted to side with the Notary or Signing Agent when it comes down to standard payments for Signing Agents. We tend to make less money than the Signing Company that contracts us at times. Not sure what the pros and cons are at receiving a minimum wage the signing fee for a Signing Agent. I see the cons for the companies who hire us. I want to make sure that our interests are truly represented. I believe the NNA has failed us by not advocating for Signing Agents to be paid fairly. Signing Agents are printing and prepping closing packages, now responsible for ensuring the packages are complete, required to purchase equipment (printers, scanner and fax machines), required to scan back, etc. When I first started doing signings the package was overnighted to us with a return package and all we did was the signing. Now we are responsible for printing on high quality paper and using laser printing ink. As a notary performing a traditional notarization for the general public is different. The signer provides the document and we notarize. Yes being an independent contractor is great but as employees Signing Companies would have to provide our printers, scanners, toner, paper, pay for our cell phones, our internet and pay minimum wage plus the signing fee....so maybe it's time for some sort of revamp not sure what it will look like but all I am asking is the NNA actually advocate for fair treatment and fair payment to Signing Agents and Mobile Notaries who carry the burden and expenses but are not being paid full fees for the higher level of work and responsibility placed upon us.

Matt G Miller

30 Sep 2019

Why are you guys trying scaring the industry? It has already even announced that this does not apply to public officials .

Carol

30 Sep 2019

I agree with many of Beth's points. We are not paid fully for the amount of work and responsibility that we have. And I also agree that NNA does not fully support and advocate for NSA. We pay for membership and buy other services and supplies from you but NNA is not always there backing us. i.e. recent e-notarization law that didn't pass. It would have hurt our businesses, but you supported it.

Colleen Kearns

30 Sep 2019

I agree with Beth...in the 1980's, I performed signing packages for a mortgage broker in Orange County, Ca. I did not do any of the printing, packaging, etc. I didn't even have to explain anything. The loan package was delivered to me....I set the appointment for the signing, if one had not been preset. (I was provided a timeline in which it had to be done or sometimes, immediately.). The broker or loan officer was available by phone and explained the numbers and documents to the client while I was onsite. They discussed the package. If they were all in agreement, I completed the signing and delivered the package and any supporting documents that needed to be provided to the mortgage broker. If it was urgent and an immediately due signing, I would drive it to their office or overnight it to them via the drop box method. I was never responsible for explaining or printing and copying. I was responsible for the signing only and delivery of the signed package and I was paid very well for this. All of this was during the refinance boom. Since I was not a licensed loan agent or broker, I was not allowed via Real Estate Laws, to quote any numbers or even read the documents to the borrowers. I just had to show the document and read the title of the document to the borrower and show them were to initial or sign and do my due diligence as a Notary Public to do what a Notary Public does....ensure proper identification and execute a correct notary. As a Notary Public, I have been to court countless times and testified, with my journals. I have always done things correctly and will refuse to notarize any signature on a document, when I have reason to believe the signer is not clear about the documents they are signing. Many attorneys get angry and upset with me, but in the end when we all end in the court room, they are grateful for my intensity in making sure that the client comprehends what they are signing. SSA's now have a huge responsibility and I don't feel are properly compensated for all of the responsibilities and liabilities for these signings.

Michael McFarland

30 Sep 2019

I agree with Beth's comments. I've turned down signings because they just don't pay enough to cover expenses. When a typical refi is approximately 150 pages and I have to print two sets, that's not only a lot of toner, but a lot of paper. Neither of which are cheap. I won't take a signing for less than $75, and that depends on the type of signing and if scan/fax backs are required. Mileage factors in, as do the rest of the items she mentioned. The NNA should advocate for their Notary Signing Agents if for no other reason than we have to take THEIR course for certification (again, not free).

Ana Chavez

01 Oct 2019

I agree. All is true. The NNA is not supporting its people. Signing companies are the ones benefiting, while notaries do all the heavy lifting and not taking any of the work. I think it’s time for notaries to demand the NNA to back us up, or move off to let us find an association that works and supports California’s notaries. It’s time to take a title seriously.

TC

01 Oct 2019

I agree with all comments! Where and how did all these Signing services gain such control over Title/Escrow Cos.? They are taking half if not 3/4 of the notary fee. It is ridiculous and all these notaries accepting lowball offers are killing the industry... we need to get it back!!!

Avtar Gondara

01 Oct 2019

Underpayment. There is a Valid basis for making out a case in favor of standard payment. Title companies must pay minimum fee for each notarization plus printing, paper and gas charges.

Hutchingsmobilenotary@yahoo.com

04 Oct 2019

Beth, well said and thank you for the comment. I agree.

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