does not mean boards should terminate relationships with solo service providers who only work with their community, it is merely a recognition that some solo ser- vice providers may need to diversify their clientele if they wish to remain an independent contractor. In other cases, boards may need to modify their budgets to accommo- date the added costs associated with having an employee. Tere’s not a right or wrong answer to whether a com- munity should use an independent contractor or have an employee. Generally speaking, the courts will defer to the board’s presumed expertise in operating the community, so long as the decision was within their scope of author- ity, based on reasonable inquiry, made in good faith, and with the best interests of the community in mind. Te important take away is making sure individuals or entities that exclusively work with one association are either re- classified as employees or are part of a larger organization and properly qualified as an independent contractor.


It’s not all doom and gloom in the post-Dynamex AB 5 landscape. While many independent contractor relation- ships will continue without change, for those that are (or might be) affected, with a few tweaks, boards can still suc- cessfully (and lawfully) operate their community associa- tion. Te primary objective for boards should be to first understand what, if any, relationships are impacted by the law and then to take appropriate action.


Te first step boards should take is to review all their ser- vice provider relationships, paying close attention to any solo service providers, or individuals who only work with their community. In most cases, if a vendor provides ser- vices to multiple clients, these relationships can be safely excluded from further scrutiny. While it’s a bit unsettled on whether AB 5 may expose hiring parties to co-employ- er liability, all preliminary indications suggest the statute is intended to be focused on whether someone is misclas- sified, not adding more potential employers into the mix. For any individuals that don’t fit the easy mold, while it may be an added expense, engaging legal counsel could mean the difference between correctly analyzing the ABC Test or not. Most importantly, if an association comes across an individual who now qualifies as an employee, it’s imperative the board consults with legal counsel to evaluate the appropriate employee classification, analysis of wage and hour considerations (which may also be ap- plied retroactively), and implement an employee hand- book (if the associations does not already have one).


Next, community associations should always have a con- tract with their service providers. Gone are the days when an association can operate on a hand-shake deal. Te fol- lowing terms are aimed at helping communities comply with AB 5 requirements: (1) be clear in setting compre-


hensive duties and service expectations, (2) allow the service provider to determine the means by which they will carry out their responsibilities, (3) include a periodic evaluation schedule, as op- posed to a daily check-in or less structured type of oversight/interaction, (4) confirm they are not under the board’s control and direction, and (5) outline the service provider’s business and distin- guish it from the association’s operations.


Lastly, in addition to the new AB 5 related terms to include in independent contractor agreements, always remember to include standard provisions such as payment terms, insurance requirements with a requirement that policies cannot exclude claims arising from a common interest develop- ment, termination protocols, term/duration, and indemnity protections. As always, remember to review the association’s governing documents to ensure the board has the right to enter into the specific contract terms being considered (espe- cially regarding the term/duration).


While AB 5 is uncharted territory for everyone, those boards that proactively take steps to assess their association’s exposure and respond appropri- ately will set their communities up for long-term success and lower liability. Less lawsuits = happy homeowners!


JASMINE F. HALE is a Partner at An- gius & Terry, LLP where she serves as gen- eral counsel to the Firm’s clients. She has almost 20 years of experience and is Sac- ramento’s only Fellow from the Commu- nity Associations Institute’s (CAI) presti-


gious College of Community Association Lawyers (CCAL), the industry’s highest designation for attorneys who work with com- mon interest developments.


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