California Law and the Independent Contractor – cash, tips and more! Hi

While updating a document I noticed a change to the FAQ provided by California which outlines something important to point out which is in bold below…

In accordance with California Law, all client funds must be placed paid by credit card directly to the supplier, or placed directly into the Agency Trust Fund account (for cash or checks), and can never be deposited into an Independent Contractors account, nor any other personal bank account. (Bus. & Prof. Code §17550.15(b)<http://oag.ca.gov/travel/statute>.) Independent contractors may not receive cash payments, nor can checks made payable to anyone other than registered seller of travel (agency). Additionally, an Independent Contractor may not receive payment or service fee directly from the client, in any form and for any reason, including cash tips. In the event a client wishes to provide a monetary tip or compensation to an agent, a check must be made payable to the travel agency and then go through the Travel Agency Trust Account.

Failure to comply with California Seller of Travel laws can result in up to $25,000 in fines and 16 months in jail – and they tend to not give warnings, and instead impose penalties with the first offense.