Dear Friends and Colleagues:

NAWBO-California has politicalinfluence. Each year, we areincreasingly recognized as a forceto be considered on issues affect-

ing the overall business community of thisgreat state. A record number of NAWBO mem-bers from the state's nine chapters attendedour fourth annual legislative action event inApril. We focused on educating attendees andinforming legislators about our critical bottom-line business issues. We informed legislatorsabout how "squeezed" our profit margins are, inthe hope that our insights will help ease thestate's seeming "anti-business" climate.

We took advantage of a great opportu-nity for bi-partisan women business owners tomeet their elected officials face-to-face, informthem of our concerns and provide our uniqueperspective.

This edition of the NAWBO-CA bulletinfocuses on two key issues discussed inSacramento: independent contractors andworkers compensation. We also provide aninspiring story of a NAWBO member's successin securing contracts through government pro-curement outreach. With Governor Davis nowrequiring that government agencies contract atleast 25% of their outsourcing to small busi-ness, NAWBO members must be prepared tocapture such opportunity.

Revolutionary, streamlining changesbrought about by Secretary Aileen Adams ofthe General Services Agency, and her lieu-tenant, Chloe Hewitt, ensure that more womenbusiness owners than ever can compete forcontracts. The changes are recognition, at longlast, that we are crucial to the overall successof California's economy.

Together, we mean business, for everymember of every chapter who gets involved.

Sincerely,

Betsy Berkhemer-Credaire, President, NAWBO-CA, 2002-2003

By Sharon Gadberry,Ph.D., NAWBO-San Francisco

For the past three years, the“Independent Contractor” workerclassification has been a hot buttonissue for NAWBO-California. ManyNAWBO members either use indepen-dent contractors on large projects orserve as independent contractorsthemselves, making it an integralpart of our business success. Yet,hazy federal and state definitionscontinue to put us at risk of viola-tion, with substantial fines and inter-est payments that have literally dri-ven some women-owned companiesout of business.

NAWBO-CA took the leadduring the annual Legislative ActionDay on April 8 to propose a new defi-nition of independent contractors. A14-member, statewide NAWBO task-force was created and has beenworking since. Our goal: to write aclear, simple usable definition, findlegislators willing to back it, gainsupport from other business groupsstatewide for passage and emergewith a definition that helps, nothurts, businesses. The Problem

Independent contractors arethose in business for themselves who

Women Business Ownersin the News NATIONAL ASSOCIATION

OF WOMEN BUSINESS OWNERSCalifornia Chapter

SUMMER 2002

provide services for others and areNOT legally employees. But underfederal and state regulations, no suchstraightforward definition exists.

Instead, legal definitions arecomplex and the IRS and six stateagencies constantly search for “mis-classifications.” To avoid penalties,employers accused of misclassifyingmust meet more than 20 criteria.

Businesses typically runafoul of regulations when an indepen-dent contractor they previously useddecides to file for unemployment ben-efits. Business owners often may notknow specifically what particularcondition they have violated. Unlikecourt hearings that are open to thepublic, state EmploymentDevelopment Department investiga-tions and decisions are closed,bureaucratic determinations.

A finding of misclassificationcan mean business owners have topay at least 20% of FICA taxesretroactively, 100% of FICA and fed-eral unemployment tax, plus 1.5% ofthe “employee’s” compensation, inter-est and possibly other penalties. The New Definition

The new definition we pro-pose is called Contract ServiceProvider (CSP). It would consist of aminimum of two “tests,” or a simpli-

NAWBO-CA Devises Plan To Change Independent Contractors Definition

cont on pg 3

Women Business Owner

NAWBO means business. Get involved. For more inform2

By Mary GilmoreChanges to California’s work-

ers compensation benefits go intoeffect in January 2003 and businessowners can expect no relief. Instead,the new rules are likely to drive upworkers compensation insurance costsby exposing more businesses toalready-injured workers, who will ulti-mately be re-injured and file claimsagain. Thus, it is imperative that employ-ers be more proactive than ever withtheir workers compensation insurancecarriers to make sure injured employeesare properly retrained.

Under new rules that spedthrough the state legislature with sup-port from labor and attorneys, injuredworkers can choose lump-sum paymentsof $10,000 instead of the existing$16,000 in vocational counseling, train-ing and living expenses typically provid-ed over six months. Cash-strappedworkers will likely opt for immediate

Coping With Workers Compensation Changes For 2003

payment, end up untrained for new jobsand return to their old jobs, facing re-injury and repeat claims.

Injured workers will simply berecycled through the system, ultimatelydriving up costs. Already, insurance pre-miums are 30% higher than last year. Asecond bill to “fix” the new law is leg-islatively dead. So, business-owners

must be pro-active in 2003 to keepcosts down.

That means if your workers areinjured, don’t cut them off. Instead, con-tact them to see how they are doing, sug-gest they retrain, refer them to classesor training and use them in new posi-tions at your company. Also, contact theinsurance company to have a say in howyour dollars are spent on your employee.

With the average cost to replacean injured worker at $17,000, youractions could reduce that expenditure,plus, lower the insurance company payout, keep your premiums from rising,prevent worker re-injury, generate good-will to avoid worker lawsuits and, ulti-mately, create a better workplace.

Mary Gilmore owns Computer CareerConnections, a computer training facilityin West Covina and Compton. She can bereached at 626-813-1566 or mary-gilmore@computercareerconnections.com

NAWBO-LA members visited the Senate Chambers. From left to right, Rochelle Schneider; Kathy Renman; BetsyBerkhemer-Credaire, NAWBO-CA President; Renee Fraser, NAWBO-LA incoming president; Sheila Hartman; TammieFletcher, NAWBO-CA State Administrator, and Elizabeth Blakely, NAWBO-CA secretary. Mark your calendars forNAWBO-CA Sacramento Day in March 2003!

Left to right: Rochelle Schneider, CristiCristich, Cathy Daughtery, Mary Gilmoreand Rachel Owens from the NAWBO-Orange County chapter met with stateSenator Bob Margett during NAWBO-CALegislative Action Days.

rs in the News

ation, call 1-888-NAWBO-CA or log on to www.nawbo-ca.org. 3

Valencia Roner, president and CEO of VXREnterprises, a marketing and public relations firm in CulverCity, never intended to seek government contracts when shestarted planning to create a business in June 1999.

But the information needed to complete a busi-ness plan and a $50,000 Small Business Administrationstart-up loan application was so detailed, she figured shemight as well use it to fill out government certificationforms at the same time. As a result, Valencia has securedsix government contracts, comprising 60% of her rev-enues last year and giving her a healthy boost for a rela-tively new business.

“The key to a lot of it is simply follow directions,”Roner said. “Do what they ask you to do, no more, noless.” For Roner, that meant taking the time to fill out inpainstaking detail certification forms for the city and

Planning To Succeed With Government Contractscounty of Los Angeles, the Metropolitan Transit Authority, theOrange County Transit Authority, and the Southern CaliforniaRegional Purchasing Council. It also meant trolling web sitesto find procurement opportunities, attending pre-bid confer-ences to ask questions and sticking to 10-minute time limitsduring presentations and not lugging in charts, PowerPointpresentations and other time-consuming audio visual aids.

Going through certification and bidding has providedValencia with a thorough knowledge of her own business andhas allowed her to assemble teams with other businesses towork on contracts. She is now ready, thanks to governmentcontracting, to spread her wings in new directions and isrevising her initial business plan.

Valencia Roner can be reached at 310-641-1696 orvalencia@vxrenterprises.com.

fied list of criteria that an inde-pendent contractor would meet inorder to be defined as a CSP.

The CSP could qualify ifthey are a certified Californiasmall business, and/or possess avalid business license, haveinsurance coverage self-paid bythe contractor, market to multiplepotential customers, bill multipleclients and have investments inbusiness assets such as equip-ment and tools.

The Compensation Testwould ask: Does the CSP workunder a negotiated and specific,written contract or have a recur-ring monthly retainer agreementfor general services? In addition,the CSP must have flexibility inperformance times for the con-tracted work and not be requiredto “work” during client-specifiedhours or dates, except for mutual-ly agreed upon joint meetings orscheduled group presentations.

Key to this new definitionis the removal of the burden ofproof from business owners andtheir operations. The new defini-

tion would help introduce theCSP’s “intent” to be in businessinto the criteria and avoid restric-tive examinations of how the workitself is performed. The Progress

NAWBO-CA faces formida-ble opposition. State officials canpoint to substantial past abuses ofindependent contractor laws bylarge corporations. Big companieshave laid off workers and hiredthem back as independent con-tractors to perform essentially thesame tasks, at the same deskswith the same hours, but with noemployee benefits. Labor unions,

meanwhile, seem to be opposed toany changes that would make iteasier to classify independent con-tractors.

We are receiving limitedinterest from state legislators andhave been all but ignored by labor.We believe a clear definition wouldbe a win-win for labor and forbusiness owners. Once a definitionis created with the support of afew key legislators, more support-ers will join the battle, such aschambers of commerce, smallbusiness associations and laborunions.

Our members rely on inde-pendent contractors to help usgrow, obtain larger projects and dobusiness. The issue is vital to ourcontinued success and we are com-mitted to seeking needed change.

Sharon Gadberry, Ph.D., is aManaging Partner, of TMG/PowerMarketing, and a founding mem-ber, of the NAWBO San FranciscoChapter. She can be reached at415-403-7002 orSharon@tmgpm.com.

cont from pg 1

Mary Griffin

Sharon Gadberry

Mary Griffin of Griffin &Associations, alegislative andgovernmentaladvocacy firm inSacramento,was chair ofNAWBO-CA’sLegislativeAction Days in April. The day consisted of panel discussions onimpending legislationaffecting smallbusiness ownersand personalvisits with legislators todiscuss the hot issues.

Women Business Owners in the News

NAWBONATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS—California Chapter1-888-NAWBO-CAwww.nawbo-ca.org

EXECUTIVE BOARDBetsy Berkhemer-Credaire, PresidentCristi Cristich, Immediate Past PresSharon Gadberry , VP of Public PolicyJoan Alleckson, TreasurerElizabeth Blakley, SecretaryFrances Nevarez, VP of Corp Relations

CHAPTERSDesert CitiesInland EmpireLos Angeles

Orange CountySacramento

San DiegoSan FranciscoSilicon Valley

Ventura

Save the Date!NAWBO-CA Meeting November 8-9, 2002

San Diego, CA

“NAWBO-CA LIVE” BY VIDEO CONFERENCE Thanks to Club Corp connections

NAWBO-CALIFORNIA has the ability to connect all of the nine chapters by“live” video conference through the major city locations of Club Corp. which is anational corporate partner for NAWBO. Betsy Berkhemer-Credaire, new NAWBO-CAPresident, hopes to utilize the statewide hook-up for key CA Public Policy discus-sions.

Thanks to the City Club in Los Angeles, and its Private Events Managementspecialist, Ms. Reagan Boyce, a framework has been created to offer full-screenvideo connections for instant-time “as good as being there” broadcasts to include allchapters, and more.

Cities which can be connected are, from north to south: Sacramento, SanFrancisco, San Jose, Fresno, Bakersfield, Los Angeles, Ventura, Orange County,Inland Empire (San Bernardino), Desert Cities (Indian Wells) and San Diego.

To accomplish this incredible feat of technology, each chapter would pro-duce 10-15 participants, at a cost of $35 per individual, which includes continentalbreakfast and the one-hour video conference. There is also a business-developmentbenefit for each business-owner because she will be seen on the video and intro-duced to the other women business-owners throughout the state.

“Such a communications tool will glue the NAWBO leaders of this statetogether like never before,” explains Betsy Berkhemer-Credaire. “I am convinced thatall chapters—including regional supporters in Bakersfield and Fresno where chap-ters do not yet exist—will benefit from this technology connection.”

NAWBONATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS—California Chapter1431 La ColinaTustin, Ca 927801-888-NAWBO-CA

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