BILL NUMBER: AB 205	CHAPTERED  07/05/01

	CHAPTER  36
	FILED WITH SECRETARY OF STATE  JULY 5, 2001
	APPROVED BY GOVERNOR  JULY 4, 2001
	PASSED THE ASSEMBLY  JUNE 25, 2001
	PASSED THE SENATE  MAY 30, 2001
	AMENDED IN SENATE  MAY 22, 2001
	AMENDED IN SENATE  MAY 7, 2001
	AMENDED IN ASSEMBLY  APRIL 16, 2001
	AMENDED IN ASSEMBLY  MARCH 29, 2001

INTRODUCED BY   Assembly Members Koretz and Cardenas
   (Coauthors:  Assembly Members Aroner, Correa, Negrete McLeod,
Richman, and Washington)
   (Coauthors:  Senators Johannessen and Kuehl)

                        FEBRUARY 9, 2001

   An act to add Chapter 4 (commencing with Section 16300) to Part 1
of Division 7 of the Business and Professions Code, relating to
business licensing.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 205, Koretz.  Business licenses and fees:  employment
relationship.
   Existing law authorizes cities, including chartered cities, in the
exercise of their police power and for the purpose of regulation, to
license any kind of business not prohibited by law transacted and
carried on within the limits of their jurisdictions, and to fix the
rates of the license fee and provide for its collection, according to
specified criteria.
   This bill would prohibit any city, including a charter city, city
and county, or county, from requiring an employee to obtain a
business license or home business occupation permit for, or imposing
a business tax or registration fee based on income earned for
services performed for an employer by the employee in an employment
relationship, as specified.
   This bill would become operative only if AB 63 is enacted and
becomes effective on or before January 1, 2002.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Chapter 4 (commencing with Section 16300) is added to
Part 1 of Division 7 of the Business and Professions Code, to read:

      CHAPTER 4.  EMPLOYMENT ACTIVITIES

   16300.  (a) Notwithstanding any other provision of this part,
Chapter 1.5 (commencing with Section 7284) of Part 1.7 of Division 2
of the Revenue and Taxation Code, or Chapter 3 (commencing with
Section 37100) of Part 2 of Division 3 of Title 4 of the Government
Code, no city, including a charter city, city and county, or county
may require an employee to obtain a business license or home business
occupation permit for, or impose a business tax or registration fee
based on income earned for services performed for an employer by the
employee in an employment relationship as determined by reference to
the common law factors reflected in rulings or guidelines used by
either the Internal Revenue Service or the Franchise Tax Board.  When
there is a dispute between a city, city and county, or county and a
taxpayer, the manner in which a taxpayer reports or reported income
to the Franchise Tax Board or the Internal Revenue Service shall
create a presumption regarding whether the taxpayer performed
services for an employer as an employee, or operated a business
entity.  For purposes of this section, "income" includes income paid
currently or deferred and income that is fixed or contingent.
   (b) Nothing in this section shall be interpreted to limit the
authority of a city, city and county, or county to adopt and enforce
zoning, health and safety ordinances, or regulations that define and
limit activities that are permissible within its jurisdiction for the
purposes of health, safety, welfare, and the provisions of
applicable noise ordinances.
  SEC. 2.  This act shall only become operative if this act and
Assembly Bill 63 of the 2001-02 Regular Session are both enacted and
become effective on or before January 1, 2002.