New California Law Requires Disclosure When Using A Chatbot

Beginning on July 1, 2019, a new California law will require websites that use chatbots to clearly disclose that it is a bot communicating online, and not a person.

The use of online chatting with ecommerce and other types of websites is becoming more widespread on a daily basis. Online chat tools allow potential customers to ask questions about products and services and get answers on a real-time basis. These tools also enable companies to address service and support issues on a real-time basis. I’ve used these tools to get help from wide spectrum of websites, ranging from the Delaware Secretary of State, when I needed guidance on a corporate filing on behalf of a client, to Goulet Pens, when I dropped an expensive fountain pen and needed guidance on a replacement nib.

The new California law makes it “unlawful for any person to use a bot to communicate or interact with another person in California online, with the intent to mislead the person about its artificial identity for the purpose of knowingly deceiving the person about the content of the communication in order to incentivize a purchase or sale of goods or services in a commercial transaction or to influence a vote in an election.”

However, there’s no liability if the person using the bot discloses that it is, in fact, a bot. The disclosure must be “clear, conspicuous, and reasonably designed” to inform persons that they are communicating with a bot. While the law doesn’t provide any more specific information on how a disclosure can comply with that standard, we can look to some general principles and Federal Trade Commission (FTC) guidelines that have evolved over the past few years. For example:

  1. Placement and prominence of the disclosure
  2. How close the disclosure is to the related claim
  3. Whether the disclosure can be avoided
  4. Whether other parts of the advertisement distract from the disclosure
  5. Whether the language is understandable

 

Considering that more than 39 million people live in California, it is highly likely that some California resident is using your website, no matter where your company is based, and no matter whether you sell to businesses or consumers. Consequently, we strongly recommend that all companies that sell goods or services and that use online chat tools comply with the California law. As mentioned at the top, this law goes into effect on July 1, 2019.

California Adopts New Independent Contractor Test

In a recent case, the California Supreme Court adopted a new standard for determining when a worker is an independent contractor, and when a worker is an employee. This is a major departure from how workers have been classified in the past, and will have far-reaching effects on employment and the gig economy.

The case, Dynamex Operations West, Inc. vs. Superior Court, involved delivery drivers for a parcel delivery company. Under the new, 3-factor “ABC” test adopted by the Court, a worker is presumed to be an employee, and will only be considered an independent contractor if:

1. The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract and in fact;
2. The worker is performing work that is outside the usual course of the hirer’s business; and
3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work being performed.

All three factors must be satisfied, or the worker will be re-classified as an employee. In adopting the new ABC test, the Court abandoned the traditional “right to control” test, which looked at numerous indicators of control, none of which was dispositive.

To see how this new test will play out, let’s look at an example of a software company that engages software developers, but wants to classify them as contractors. The company may tell the developer that it needs software in place to protect data security from hackers. The company may not give the developer any directions as to how to write the code for that software, and may not require the developer to do the work onsite, which may satisfy the first part of the ABC test. Also, the developer may be doing a lot of freelancing in the area of data security for different companies, satisfying the third part of the test. The problem is the second part. If the company is a software company, then software development could very likely be considered within the usual course of its business. The same analysis might apply to a package delivery company that wants to classify its delivery persons as contractors. On the other hand, a retail clothing chain that hires a software developer to work on its customer database may have a better chance of classifying that developer as a contractor.

Consequently, companies in California that use contractors need to take a hard look at how the relationship is set up. It is quite likely that under the new ABC test, many of those contractors will need to be reclassified as employees.

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San Francisco Raises Minimum Wage

cablecarIf you are an employer in San Francisco, I hope you paid attention to the election a few weeks ago. San Francisco voters passed Proposition J, implementing a series of minimum wage increases into law. Effective January 1, 2015, the minimum wage in San Francisco will go up to $11.05 per hour. Hold on tight, employers, because the minimum wage will go up again just a few months later, on May 1, 2015, to $12.25 per hour.

Several other minimum wage increases are scheduled for later years. On July 1, 2016, the San Francisco minimum wage will increase to $13/hour. On July 1, 2017, the minimum wage will increase to $14/hour. And on July 1, 2018, the minimum wage will go up to $15/hour.

Employers can obtain a new minimum wage poster here, which they should post in a prominent location in the workplace by the end of this year.