Fellow Citizens,

I am deeply concerned about plans to expand housing in the Bay Area and the Peninsula. While I support housing increases, I feel this new housing should not be placed in my backyard. Allow me to explain.

I purchased my 2 bedroom bungalow in Palo Alto last year. I paid $5.5 million for it, which I financed with a 10% down ARM mortgage. I am counting on significant price appreciation on this property for personal enrichment. Due to Prop 13, I am shielded from any property tax increases, and I am hoping for, at least, 10% year-over-year increase in the property value, with a target exit price of $10 million.

Unfortunately, these plans to build more housing in the Bay Area may jeopardize my plans. If enough housing is built, I don't see how I will get a return on my investment, as price increases will slow. I therefore strongly oppose any new housing, as it may lower the value of my investment.

I understand this line of reasoning is unpopular. Therefore, I propose we couch our anti-growth arguments in more popular terms. At upcoming city council meetings, I plan to discuss concerns about traffic and parking. Additionally, I plan to voice ambiguous concerns about preserving "neighborhood character." These positions will be politically acceptable, and help ensure my goal of 10% year-over-year ROI.

Thank you for listening, and I look forward to increased housing costs to fund my early retirement.

Signed,
Mr. NIMBY
On Behalf of Palo Alto, Cupertino, Menlo Park, and others

The narrative beloved by some sticker-shocked newcomers lately is that (a) massive local hiring is somehow inevitable and beyond discussion, but (b) rising housing cost is "created" by existing "NIMBY" homeowners deliberately restricting supply to inflate their own property value.

It's easy to see the blind spots in that thinking, unless you're among those whose own self-interest it serves.

But also, those arguments are peculiar to this current boom. (Silicon valley has had several, if you didn't know; the previous boom was the late-1990s "dot-com" era). Past waves of sticker-shocked newcomers amid rapid housing-price rises had, I believe, more self-awareness: well-paid new hires entering the local market for housing push the prices up, and at least some of them see the absurdity of grousing over a problem you helped create.

But today, there are people who perceive nothing absurd or obnoxious in demanding -- forcing -- tens of thousands of local residents who've spent many years here, contributed to the life of the town, are NOT connected with the boom firms of the moment, and see no real benefit from their presence, to accommodate a reshaping of their city -- essentially in order to accommodate those firms. Because it all boils down to them. No massive hirings, no "housing crisis." Past history has demonstrated that here.

Moreover, the same firms somehow ignore the successful examples of silicon-valley boom firms past, like Hewlett-Packard and the semiconductor giants, which routinely expanded by building and hiring into less-crowded regions, rather than expecting to add workers by the tens of thousands within commuting distance of the home plant.

In response to Mr. NIMBY you said:

“I purchased my 2 bedroom bungalow in Palo Alto last year. I paid $5.5 million for it, which I financed with a 10% down ARM mortgage. I am counting on significant price appreciation on this property for personal enrichment. Due to Prop 13, I am shielded from any property tax increases, and I am hoping for, at least, 10% year-over-year increase in the property value, with a target exit price of $10 million.”

As you should have known, it is an unregulated investment and has significant risk. Where did you get the assurance that you could achieve that ROI? If you were given that information from a real estate agency or appraiser, you took advice from the wrong person. Simply put, it looks like that was unrealistic.

Unfortunately, it looks like in order to increase the inventory of affordable housing, it is unavoidable that current values will decline. Because we are in a critical shortage, increasing current values above the NORMAL values that would be considered realistic. You also said:

“Unfortunately, these plans to build more housing in the Bay Area may jeopardize my plans. If enough housing is built, I don't see how I will get a return on my investment, as price increases will slow. I therefore strongly oppose any new housing, as it may lower the value of my investment.”

Again, you seemed to get convinced that you are entitled to a profit based on the purchase of a home. The 2007-9 Housing Correction proves that you are not entitled to any increase in your home’s value.

My most important issue with this part:

“Councilwoman Margaret Abe-Koga, who co-authored the letter, said she worried that a new state housing bureaucracy would end up shifting Mountain View's tax revenues to build new housing in other cities.

"For Mountain View, we're hitting our housing quota, but we need more money for affordable housing production. That's where the state should come in and help," she said.”

She is clearly in error here is you read the following:

“The 2007-2014 housing report stated that:

Mountain View had a need of Very Low housing of 571 but only had 237 which reached 42%, Low Income Housing 388 but only had 28 which reached 7%, Moderate Income housing of 488 but only had 4 which reached 1%, Above Moderate housing of 1,152 but had 2,387 or reached 207% of the needs.

Compare with current record:

Mountain View had a need of Very Low Income Housing of 814 but has only provided 120 which reached 15%, Low Income housing of 492 but has only provided 135 which reached 27%, Moderate income housing of 527 but provided no additional housing which reached 0%, and Above Moderate housing of 1,093 but has 2,004 which reached 183%.”

She may be discussing the CITIES quota, but not the regional needs.

I have to admit, first off, that I don't know the answers to all these broader questions.

But I'm trying to think it through.

Here's what I know:

I am a renter in Mountain View, have been for a long time. It's expensive. Perhaps irresponsibly expensive, even. I could be making the wrong choice in trying to stick it out here; but I pay dearly for the privilege.

As has been for over a hundred years, the poorer areas are closer to the railroad tracks, and the wealthier areas are toward the coasts.

I, and many others, had an option in "more affordable" times, like 1997, 2003, and 2009 of moving eastward where housing (and in particular, owner housing) was more affordable.

I consciously chose to be a renter in a wealthy area; and I pay the price of that decision. I live somewhere green (not brown), with easy access to freeways (and therefore commutes to jobs). But it means I have to make it work in 600 sq ft, and pay a large portion of my income in rent. It's just what it takes.

Why does the Peninsula have the obligation to change that? What do the cities and citizenry of Hillborough, Atherton, Menlo Park, Belmont, San Carlos, Burlingame, Redwood City, Palo Alto, Los Altos, Los Altos Hills, and Mountain View owe to society that their enclave of wealthy landowners and renters (who would be upper middle class somewhere else) need to change their paradigm?

I can't answer that. I've never figured that part out.

> Why does the Peninsula have the obligation to change that? What do the cities and citizenry of Hillborough, Atherton, Menlo Park, Belmont, San Carlos, Burlingame, Redwood City, Palo Alto, Los Altos, Los Altos Hills, and Mountain View owe to society that their enclave of wealthy landowners and renters (who would be upper middle class somewhere else) need to change their paradigm?

Consider this alternate frame which illustrates how unfair the current regime is. Current zoning laws and policies are restricting and individuals right to buil housing for themselves at an affordable price. No one is forcing you to sell your house in Palo Alto. What we are saying is this: if I buy a 10 acre plot of land in Palo Alto, why can’t I build 50 affordable condos there? Why are you making it illegal for me to build a sub $1 million residence in Palo Alto?

You are perfectly entitled to your $10 million house. Just let me build my $500k condo.

Thanks for the food for thought.

Although I don't know a 600 sq ft condo in Mountain View that goes for less than $800K, I still get your point.

I mean, if I could find a $500K condo, I'd go for it.

What many of the YIMBYs don't address is that there are three parts to this:

* Housing
* Transit
* Offices -- and adding more jobs to areas that cannot keep up with housing

If the YIMBY's want to take local control for housing, and allow anything-goes, they and the developers who are paying off the legislators need to allow us to stop all offices and all new jobs until we get back to a 1 to 1 ratio of jobs and housing. And we need massively more transit, and not just more Caltrain trains.

Once those two other pieces are in sync, and we have the housing planned in MV (6000 units in pipeline, 14000 more units proposed and likely to be accepted), and we add no new jobs to MV for.. 20 years? or whatever it takes?

Then it would be fair. But to take away local zoning, which Mountain View uses to get developer fees for schools and parks and new infrastructure (not maintenance or salaries) to support the new residents, without a trade for a lot of new funding for these items (remember that SB 50 et al removes developer fees.. so we'll be paying for it not developers), and to not allow us to block offices, and to have us have little control over transit, is a triple whammy.

Oh and why did this article not mention the $279 BILLION in new taxes that regressively the public will be asked to pay to cover the missing developer fees?

Yeah.. the YIMBY's have it all figured out. And we'll all pay for it.

"Housing advocates say the city-led status quo is insufficient and unsustainable." Blindly idealistic and ignorant activists are putting things bass ackwards" --- as usual. The real solution is to realize that the State of CA is in an unsustainable population explosion and must take any legal means necessary to stop it. I guess Paul Erlich's book "The Population Bomb" was correct after 50 years of being poo-pooed for its "alarmist tone", to paraphrase Wiki. Erlich stated in 2009 "perhaps the most serious flaw in 'The Bomb' was that it was much too optimistic about the future", again paraphrased from Wiki.

> Although I don't know a 600 sq ft condo in Mountain View that goes for less than $800K, I still get your point.

> I mean, if I could find a $500K condo, I'd go for it.

Right, yea today there is no $500K condo in Mt View. My point is more, they *would* exist, if people were allowed to build them. No one would be forced to sell their home and turn it into a dense condo complex, but anyone would be allowed to buy land and build a dense condo complex on it.

The question becomes: Who's right do we care about, the people 60k people currently living in Palo Alto, or the 360k people who would live there if they were allowed to?

Palo Alto's population density is currently 2800 people/sq mi. Some dense urban areas for comparison:

New York, N.Y.: 27,012
San Francisco, Calif.: 17,179
Jersey City, N.J.: 16,736
Boston, Mass.: 12,792
Santa Ana, Calif.: 11,900
Chicago, Ill.: 11,841
Newark, N.J.: 11,458
Philadelphia, Pa.: 11,379
Miami, Fla.: 11,135
Hialeah, Fla.: 10,474

Clearly, Palo Alto & etc. can get a lot more dense, and density clearly is not lowering the desirability of any of the above cities, as they are all growing.

Should current Palo Alto residents have the right to say "You can't build here" to the rest of the state & country? What do we do about the would-be majority who wants to move to Palo Alto, Cupertino, Mt View, etc.? Who's right is more important, my right to build a house, or existing residents right to keep people out? I think that is the central question.

@@MV Renter - you’re citing the densities of the largest cities in the country and comparing them to our suburbs. People move to suburbs because they don’t want to live in the midst of densely populated cities. It’s a quality and style of life issue. Furthermore the reason you can’t build your 50 condos next to my single family home is because your high rise would be an incongruous eyesore in the midst of lower planes and would block the light to adjacent properties. Daylight planes and planning in general exist for a reason. Communities without plans for continuity look like crap.

We are manufacturing our own problems: (1) by continuing to allow major corporations to expand their businesses within our land poor geographical area which increases the need for local housing and creates a buyer/renter pool capable of affording high cost housing (2) we have open borders and continue to import poor people by the millions who then need “affordable” housing which the local taxpayers are expected to provide.

Is it wrong for the locals who have enjoyed a suburban lifestyle to want to maintain it? Once this area is overbuilt and our way of life destroyed there will be no turning back. Think hard before you transform.

@Mountview is Building Housing, but it's not enough for the YIMBY

Nothing in SB-50 prohibits cities from collecting impact fees from developers.

In fact, it explicitly calls this out:

(3) This section does not prohibit a local agency from imposing fees and other exactions otherwise authorized by law that are essential to provide necessary public services and facilities to the housing development project or emergency shelter.

and later:

(f) The residential development complies with all other relevant standards, requirements, and prohibitions imposed by the local government regarding architectural design, restrictions on or oversight of demolition, impact fees, and community benefits agreements.

Based upon many comments I have read in various housing related threads, the government and YIMBYs have no regard for the increasingly limited natural resources and lack of infrastructure.
Yes, I enjoy privacy in my backyard and would like to keep it.

As other commenters have noted, the root cause of the housing problem is the unrestrained rate of growth by big tech companies who are choosing to expand here too much rather than spreading their jobs to other regions that have well educated work forces.
While new high income tech workers who have recently moved here may complain about high rents, they can still afford them off of the $150K plus salaries. It is most everyone else in the workforce. who is really bearing the brunt of the suffering. In addition, as the Bay Area Council reported, each new tech job creates five other jobs, mostly at lower income levels than the tech worker.
As “The Business Man” above showed with data over the past decade, MV has been exceeding its share of market rate units but falling far short of its allocation of low and moderate rate units. And the cost of low and moderate units has been increasing rapidly.
There are two reasons for this. First, housing economic studies show that housing markets are highly segmented. New housing at the upper end does not affect cost in the middle and lower segments. High end market housing advocates have an obligation to study housing economics. Second, very high land prices on the peninsula mean that new low, and even moderate rate units require subsidies happen. To retain anything close to social/economic balance in the region, new revenue will need to be found to pay for those subsidies and to fix the concurrent transportation problems.
Fortunately, there may be a solution. Silicon Valley is actually an exceptionally low business tax region. Local giant tech companies with many billions in annual profits are paying a small fraction in local taxes compared to San Francisco and many other cities.

> @@MV Renter - you’re citing the densities of the largest cities in the country and comparing them to our suburbs. People move to suburbs because they don’t want to live in the midst of densely populated cities. It’s a quality and style of life issue. Furthermore the reason you can’t build your 50 condos next to my single family home is because your high rise would be an incongruous eyesore in the midst of lower planes and would block the light to adjacent properties. Daylight planes and planning in general exist for a reason. Communities without plans for continuity look like crap.

I think you're missing the point. San Francisco's density in 1920 was about the same as Palo Alto's today [1]. People wanted to move to San Francisco, and the population increased. Now it is denser.

Are we going to freeze things in time, and preserve Palo Alto's 2001 density for all eternity? Does your desire to avoid "eye sores" supersede my right to build an affordable home for myself? There is no quality of life for me in Palo Alto, because I cannot afford to live my life there. And the quality of life in Hayward, where I could afford a 3 bedroom single family home, is crap because I would have a 1.5 hour commute every day.

We need to move boldly into the future! Not attempt to preserve 2001 suburban life for the few people who were lucky enough to buy a house when it was cheap. Make room for the new people.


[1] Web Link

If you want to solve the problem then you need to first stop the bleeding. Stop approving construction for office space and luxury apartments. Five year moratorium at minimum. Then focus on keeping existing residents in their homes and building new affordable housing.

The current out of control office space and luxury apartment expansion only benefits billion dollar corporations, their employees, and developers, while residents pay the price.

It's easier than this:

* Disallow prop 13 on commercial properties.
* Classify rental properties as commercial.
* Require that the tenant named on the lease actually live in the house. This kills off all the corporate housing.
* Require a hotel license and charge hotel taxes for any stay under 21 days. Anyone staying longer than that needs to be on the lease. Rescind the occupancy permit for violators. Goodbye AirBNB.

Overnight you will have an affordable market with plenty of inventory and liquidity.

[Post removed due to disrespectful comment or offensive language]

@Mr. Nimby,

I like your post!
Maybe one day your dream can come true so you can move out of your RV that is parked along the railroad tracks by Rengstorff park.

There is nothing wrong with dreaming big!

Good Luck

> @@MV Renter - you can find your $500k condo in East Palo Alto. Why don’t you move there? That way you won’t need to ruin our suburbs.

This suggestion is a bit disingenuous. EPA has a lot of issues completely unrelated to density. For example, it has historically high crime rates. At one point, it had the most per capita murders in America. It also lacks a vibrant downtown like Mt View or of course SF. There are appealing places to live that have similar density to EPA, for example San Mateo is close, and SF is higher.

I disagree with your notion that people moving in to a city are "ruining" it. I think that, in general, people should have the following rights:

(1) A right to free movement within the United States. If I'm living in the US, I should be allowed to move from city to city.
(2) A right to build a home for myself on my property. If I own a plot of land, I should be allowed to build a home on it. This includes pooling resources with other owners, and/or having a developer build the home for me.

These rights should, of course, be subject to reasonable regulation, but the goals should be to further these rights. A city's role should be to facilitate these rights. If growth is occurring, the city should certainly plan to minimize negative impacts of growth, but it should NOT use its powers to thwart growth for the benefit of incumbent residents.

There is a problem now, because city governments are only accountable to existing residents. They are not accountable to future residents who don't live / vote there yet. That's why we need the state government to step in, and assert the rights of future residents. I hope that Gavin Newsom will follow through on some of his promises for accountability for cities that deny people their rights to build affordable homes on their own property.

@ @MV Renter

Please understand, I'm not trying to stir the pot; but merely to clarify.

By affluent/wealthy areas, I think it implicitly means low-density. Much as I cited the coast/railroad track paradigm for over a century, the landed elite have been around for centuries.

The cities and townships I cited: Hillsborough, Atherton, Los Altos, Mountain View in becoming affluent areas are the Bay Area equivalent of Beverly Hills (look at the stores), Malibu, or The Hamptons.

Density increases and affordable housing questions are for Queens or Brooklyn.

Again, I just don't get what the Peninsula as the affluent part of the Bay Area (near the coast, etc etc and the other criteria) owes that it must change its paradigm and go high-density.

And as has been done through history as well (and in this I guess I'm referencing something as pop culture as 90210), there are less wealthy renters like me who make sacrifices to be in the desirable zip code with low crime near good schools full of kids who theoretically aren't in gangs.

And I may get priced out one day. It may even be sooner than later. It would break my heart for that to happen; but that's a matter of my fiscal means being insufficient. It doesn't mean that the paradigm is broken. People (like myself) pay a ton of money (in rent or mortgage) for low density, trees, greenery, access to reverse-traffic commutes, low crime, and a suburban feel.

My biggest complaint is how crappy the roads are, when I consider how much I pay (and the risks I take) to live here. For the same money, I could be the king high-roller of a ghetto somewhere; but I'd pay for that in auto insurance premiums by zip code as my windows get busted out when people try to steal things.

> Again, I just don't get what the Peninsula as the affluent part of the Bay Area (near the coast, etc etc and the other criteria) owes that it must change its paradigm and go high-density.

Yea, I think this is the central question. I think there are a few frameworks for understanding this. Depending on which framework you subscribe to, it will decide your position on housing. (Or, in most cases, people pick the framework that benefits them!).

Framework (1): Cities as an institution exist to further the benefits of current residents only. They should not be higher government powers, like the State, that can overrule cities. City policies should not take into account the interests of non-residents or future residents.

Framework (2): Individuals have property rights to build on land they own. Cities may pursue policies for the benefit of residents, but with respect for individual property rights to build on land you own. The State can and should assert the rights of non-residents or future residents of a city.

Generally, some flavor of Framework (1) is used by existing residents to deny new development. Arguments like "traffic will get worse" or "it will be too crowded" are based on the premise that the city should ensure quality of life for current residents, without regard for future residents.

As you can guess, I subscribe to Framework (2). I think it's fine if you own a single family home, and don't want to sell it to live in a condo. However, I believe I have a right to build and live in a condo if I choose. The city should certainly plan and manage growth in density, but it should do so with the goal of maintaining my individual right to build a home.

In terms of whether Beverly Hills should be forced to change, I guess my view is this: I don't believe cities as an institution exist to insulate you from changes in society.

In response to @MV Renter you said:

“Framework (1): Cities as an institution exist to further the benefits of current residents only. They should not be higher government powers, like the State, that can overrule cities. City policies should not take into account the interests of non-residents or future residents.”

That is simply an unrealistic opinion. The Cities are responsible to PLAN AHEAD for future developments and opportunities. So that simply is not an appropriate idea. If Cities were to do as you suggest, the cities would never have any chance to take advantage of new opportunities. For example building offices or industrial development to acquire new jobs. You said:

“Framework (2): Individuals have property rights to build on land they own. Cities may pursue policies for the benefit of residents, but with respect for individual property rights to build on land you own. The State can and should assert the rights of non-residents or future residents of a city.”

That is not entirely true as a concept. Individuals do not have absolute property rights, they must be given permits and proceed in a legal manner. Also, as the current case decisions have established, as long as there is an existing understood housing crisis and at the same time we are in a war against terror, the idea of private property rights are suspended as a matter of the constitution. At the same time, the idea pf all land being private is wrong due to the provision of eminent domain, land can be taken at any time even for private reasons under the New London Connecticut Supreme Court case.. you said:

“Generally, some flavor of Framework (1) is used by existing residents to deny new development. Arguments like "traffic will get worse" or "it will be too crowded" are based on the premise that the city should ensure quality of life for current residents, without regard for future residents.”

That has been the working plan of attack to prevent any development of housing that “threatens” existing property values because any significant increase will result in equally proportional reduction of exiting property. City governments simply are not capable of balancing the situation, thus the state is taking proper actions to correct for the current housing crisis. You said:

“As you can guess, I subscribe to Framework (2). I think it's fine if you own a single family home, and don't want to sell it to live in a condo. However, I believe I have a right to build and live in a condo if I choose. The city should certainly plan and manage growth in density, but it should do so with the goal of maintaining my individual right to build a home.”

Again, the city zoning and land regulations are not enough to deal with the housing crisis problems that the entire state are confronted with. Granted there is a limited amount of areas in California that are not demonstrating the same level of housing shortage. But that is a significant minority regarding the state as a whole. You said:

“In terms of whether Beverly Hills should be forced to change, I guess my view is this: I don't believe cities as an institution exist to insulate you from changes in society.”

But the state can establish statewide policies required to correct for the greater than 20 years of intentional shortages of affordable housing by creating “inclusionary” housing requirements that will apply to all developments from now on. I strongly encourage that idea because it will prevent the problem we currently have.

Housing in California is like having cities that only sell 93 octane gasoline at the price of that gasoline and gas stations choosing not to sell any other gas. What you have is a market where many will in effect run out of gas because they cannot afford to fill the tank. That idea is a sure fire way of creating an economic crisis of such proportions that can be far more destructive than any other idea. Especially where current housing sales are declining and the only advantages of low interest rates are refinancing existing homes. In effect you are designing a housing value collapse that can make 2007 look small.

I think the comments of local officials in the article, and by various people in the comment section here, proves the need for less local control.

People complain about quality of life, they complain they are not responsible for job growth of firms who have "increased intensity of use of existing space", they complain the city is "doing its part", they complain other cities are not. Clark says this, Matichak says this, anti-growth commenters say this. This is rationalization.

Yes, Google increased its intensity of use. Yes, not all homeowners supported office growth. But the facts are simple. The outgoing council in 2014 rushed to approve 3.4 million new square feet of office they knew the incoming council did not approve of. Mountain View currently has, to the best of my knowledge, around 40,000 net inbound commutes. The housing allowances added after 2014 will help balance incremental growth, but they will not pay down this existing debt. I don't know why Matichak talks about San Jose's "housing needs". San Jose is the bedroom community serving Mountain View. 2008 ACS data for San Jose shows 60,000 net outbound commutes.

We need to own up to the problem. I'm sorry your suburban lifestyle is threatened, and I think you had a right to try and preserve it. But your comments should have gone to the 2014 council, not the new crop of YIMBYs who are trying to mitigate the city's self-inflicted crisis.

Interesting comment made by David. The thing is that the daytime population of Mountain View grows by 50,000 each day due to workers coming in for jobs. But that includes 30,000 workers coming in to work as 30,000 Mountain View residents depart to work in other cities. Half of these go to a different county to work.

So I don't know how you calculate the "deficit". Clearly a lot of people prefer to work in a different city than where they live. we have 80,000 people coming in and 30,000 people going out to work. This is all before Google adds 35,000 more workers.

The real problem on the horizon will be when the state codifies the Dynamex Operations West, Inc. v. Superior Court case

The Valley has been using IT contractors for decades to reduce costs and inflate profits. But this case set up a test that will backfire on all contractors in the state.

Granted determination of whether a worker is an independent contractor or an employee is inherently difficult.

The California Supreme Court recognized this in Dynamex, stating:

As the United States Supreme Court observed in Board v. Hearst Publications (1944) 322 U.S. 111, 121: “Few problems in the law have given greater variety of application and conflict in results than the cases arising in the borderland between what is clearly an employer-employee relationship and what is clearly one of independent, entrepreneurial dealing. This is true within the limited field of determining vicarious liability in tort. It becomes more so when the field is expanded to include all of the possible applications of the distinction.”

Thus the court established some very simple measures to distinguishes between an indemendent contractor and an employee the ABC test which starts with Part A:

“Part A: Is the worker free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact?

This means does the IT contractor control the nature of their work, are they in effect following company procedures or using their own? If the conditions of the contracts makes it that all work is to be performed in the same criteria of an employee, then this test establishes the contractor is an employee.

For example In Western Ports v. Employment Sec. Dept. the company “failed to establish that truck driver was free from its control within the meaning of part A of the ABC test, where the company required driver to keep truck clean, to obtain the company’s permission before transporting passengers, to go to the company’s dispatch center to obtain assignments not scheduled in advance, and could terminate driver’s services for tardiness, failure to contact the dispatch unit, or any violation of the company’s written policy.” Alternatively, in Great N. Constr., Inc. v. Dept. of Labor a construction company “established that worker who specialized in historic reconstruction was sufficiently free of the company’s control to satisfy part A of the ABC test, where worker set his own schedule, worked without supervision, purchased all materials he used on his own business credit card, and had declined an offer of employment proffered by the company because he wanted control over his own activities.”

The part B test is Does the worker perform work that is outside the usual course of the hiring entity’s business?

To illustrate the point, the Court provided the following analysis:

Workers whose roles are most clearly comparable to those of employees include individuals whose services are provided within the usual course of the business of the entity for which the work is performed and thus who would ordinarily be viewed by others as working in the hiring entity’s business and not as working, instead, in the worker’s own independent business.

In effect does the contractor do a job a employee would typically have to perform? Then this tests establishes the contractor is an employee.

For example, when a retail store hires an outside plumber to repair a leak in a bathroom on its premises or hires an outside electrician to install a new electrical line, the services of the plumber or electrician are not part of the store’s usual course of business and the store would not reasonably be seen as having suffered or permitted the plumber or electrician to provide services to it as an employee.

Alternatively, when a clothing manufacturing company hires work-at-home seamstresses to make dresses from cloth and patterns supplied by the company that will then be sold by the company, or when a bakery hires cake decorators to work on a regular basis on its custom-designed cakes, the workers are part of the hiring entity’s usual business operation it would be reasonable to view these workers as employees.

For part C: Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity?

Thus if the IT contractor is doing work similar to that employees do as hired by the employer? If this test indicates that the nature of the work is similar,, this establishes that a IT contractor is an employee

For example, the term “independent contractor,” “ordinarily has been understood to refer to an individual who independently has made the decision to go into business for himself or herself.” (See, e.g., Borello, supra, 48 Cal.3d at p. 354 [describing independent contractor as a worker who “has independently chosen the burdens and benefits of self-employment”].) Such an individual generally takes the usual steps to establish and promote his or her independent business….” Evidence of this will be the workers’ own business incorporation, licensure, advertisements, offering to provide services to the general public or other potential customers. Alternatively, a worker is not engaged in an independent established trade usually if the hiring company unilaterally designates the worker as an independent contractor. In addition, “[t]he fact that a company has not prohibited or prevented a worker from engaging in such a business is not sufficient to establish that the worker has independently made the decision to go into business for himself or herself.”

The hiring entity’s failure to prove any one of these three parts of the ABC test will be result in a finding that the worker is an employee and not an independent contractor for purposes of the California wage orders.

And most importantly the employers bear the burden of proof in establishing workers are independent contractors.

Employers must be careful in making the determination that workers are independent contractors, as there are many wage and hour penalties for unpaid wages, unpaid overtime, and missed meal and rest breaks, in addition to the large civil penalties under Labor Code section 226.8, which is a fairly recent law which added penalties from $5,000 up to $25,000 for each violation. Dynamex Operations West, Inc. v. Superior Court.

In fact the legislature is not even necessary for this decision to be enforceable on all contractors, including IT ones to be following the test. The fact is so far no one yet has made a case yet regarding IT contractors, but it would be a simple case given described above.

The local Corporations are yet to have had them hit with the cost of reparations regarding IT contractors. Once it hits, they will divest from the state of California quickly, and the current jobs in the area filled by IT contractors will either be transferred to employees, or that work will cease in the state.

You can imagine what this will do to this area. Even if only 25% of the jobs in this area are done by IT contractors, those jobs are more likley to vanish and never come back. Thus those working here will leave, and the current demand for all business or housing in the area will drop by 25%.

Google doesn't hire IT contractors as independents. They hire service firms who employ the staff and pay them on a W2 from the service firm. It gets tricky counting how many employees Google has when it has 100's who are paid through the other employers but use Google facilities and drive to Google each day, or even take Google buses.

In response to LongResident you said:

“Google doesn't hire IT contractors as independents. They hire service firms who employ the staff and pay them on a W2 from the service firm.”

In reality, that does not matter. They “Hired” the contracting company. Anyone being assigned by the Contractor firm is entitled to the same employee provisions as any “employee” of Google. You said:

“It gets tricky counting how many employees Google has when it has 100's who are paid through the other employers but use Google facilities and drive to Google each day, or even take Google buses.”

Again as the court ruling stated:

And most importantly the employers bear the burden of proof in establishing workers are independent contractors.

Employers must be careful in making the determination that workers are independent contractors, as there are many wage and hour penalties for unpaid wages, unpaid overtime, and missed meal and rest breaks, in addition to the large civil penalties under Labor Code section 226.8, which is a fairly recent law which added penalties from $5,000 up to $25,000 for each violation. Dynamex Operations West, Inc. v. Superior Court.

So anyone using the method you just stated will be required to bear the legal burden to prove they are not using a contracting firm to undercut the contractors rights to equal treatment as employees of either Google, or any other group. It is not constrained to only Google. EVERY HIGH TECH COMPANY IS SUBJECT TO THIS STANDARD.

There are many people living in Mountain View that works as contractors. IN FACT I AM ONE OF THEM. I have worked for companies in Mountain View, San Leandro, San Francisco and many other cities. So this will impact Mountain View in many different ways.

In effect, this situation is a significant impact on just Mountain View. Imagine the economic impact on the bay area when IT contracting dries up, that all the employers decide to phase out all this action and relocate out of the area in order to evade the laws.

This will be such a negative impact on all economics in California.