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RECENT CALIFORNIA SUPREME COURT DECISION CHANGES THE STANDARD FOR WHEN A CONSULTANT OR INDEPENDENT CONTRACTOR CAN BE CONSIDERED AN "EMPLOYEE" SUBJECT TO GOVERNMENT CODE 1090
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RECENT CALIFORNIA SUPREME COURT DECISION CHANGES THE STANDARD FOR WHEN A CONSULTANT OR INDEPENDENT CONTRACTOR CAN BE CONSIDERED AN "EMPLOYEE" SUBJECT TO GOVERNMENT CODE 1090
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7/19/2019 1:40:05 PM
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8/2/2017
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I:iCk <br />BEST BEST & KRIEGER <br />ATTORNEYS AT LAW <br />"The general purpose of GC 1090 is to prevent a situation where a public <br />official [or employee] would stand to gain or lose something with respect to <br />the making of a contract over which in his official capacity he would <br />exercise some influence." (People v. Gnass (2002) 101 Cal. App. 4th <br />1271, 1297.) <br />"'Participation in the making or forming of a contract,' is also defined <br />broadly in the context of GC 1090, and includes involvement in <br />preliminary discussions, negotiations, compromises, reasoning, planning, <br />drawing of plans and specifications, and solicitation for bids. (Millbrae <br />Assn. for Residential Survival v. City of Millbrae (1968) 262 Cal.App.2d <br />222, 237.) Thus, GC 1090 applies to consultants if they act in an advisory <br />role on the preliminary discussions, fashioning RFPs, or planning in <br />connection with a contract, and possess the ability to exert considerable <br />influence over the contracting decisions of the public agency. Clearly, this <br />prohibition would apply to "additional work' beyond the existing consultant <br />contract or agreement for the consultant or his or her company." <br />The Sahlolbei decision, while not explicitly rejecting the "considerable influence" <br />test for this factor, did say that to determine if a consultant is involved in "making" a <br />contract in their official capacity under the statute, one looks to whether "their position <br />afforded them 'the opportunity to influence execution [of the contracts] directly or <br />indirectly to promote [their] personal interests' and they exploit those opportunities."' <br />Again, this test looks more to the function and actual actions of the consultant and not <br />the quantum of influence wielded in that process. <br />It is important to note that, as the Court took pains to point out, not all <br />consultants, in all instances, will be considered an "employee" under section 1090, nor <br />will a consultant be considered to have been involved in the "making of a contract in <br />their official capacity" in all instances. <br />"That said, we do not hold that all independent contractors are covered by <br />section 1090. As the case law makes clear, section 1090 liability extends <br />only to independent contractors who can be said to have been entrusted <br />with ""transact[ing] on behalf of the Government"' (Stigall, supra, 58 <br />Cal.2d at p. 570). (See Hub City, supra, 186 Cal.AppAth at p. 1125 ['An <br />individual's status as an official under [section 10901 turns on the extent to <br />which the person influences an agency's contracting decisions or <br />otherwise acts in a capacity that demands the public trust.']; Schaefer, <br />' We caution against reading a requirement of an evil or improper intent in the word "exploit," as used here by the <br />Court. The Court explained that "exploit" simply refers to using the "official position" in any fashion. <br />-2- <br />93939.0000M29964650.1 <br />
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