One San Jose mayoral candidate appears to have violated state labor laws by treating—and paying—his campaign workers as independent contractors instead of employees.
San Jose Councilmember Matt Mahan‘s mayoral campaign lists its workers—from volunteer coordinator to deputy field director to campaign manager—as “consultants” in campaign finance disclosure forms, according to analysis by San José Spotlight. Mahan’s campaign hired 18 consultants this year alone, campaign documents show. At least 10 are in high school or college or have recently graduated, according to their LinkedIn profiles. All are paid in rounded figures similar to a flat fee instead of an hourly wage. None own campaign consultancies or firms.
That appears to violate Assembly Bill 5, a state law approved in 2019 that requires many companies to classify workers—including campaign staff—as employees instead of independent contractors. The law, initially targeting rideshare companies, attempted to crack down on employers misclassifying workers to skirt paying benefits, payroll taxes and higher wages.
Mahan is facing off with Santa Clara County Supervisor Cindy Chavez in November to replace Mayor Sam Liccardo. The pair beat out five other candidates—including two of Mahan’s colleagues on the San Jose City Council—in the June primary election.
Campaign consultants, election attorneys and pollsters with their own firms are typically considered independent contractors and exempt from AB 5, according to election law experts such as Sutton Law Firm, a recognized national leader in election and campaign finance law. That firm also consulted for Liccardo’s political action committee which has heavily supported Mahan.
“While consultants, attorneys and pollsters who have their own firms and who work for several political campaigns at the same time will probably be able to avoid the reach of AB 5, campaign staff, phone bank workers, canvassers, petition circulators and other lower-level workers on candidate or ballot measure campaigns will likely be reclassified as employees,” reads a 2019 fact sheet on AB 5 from Sutton Law Firm.
But by reporting all his workers as “consultants”—including high schoolers—Mahan’s campaign can claim them as contractors and potentially avoid providing benefits and paying payroll taxes. The state could penalize and prosecute a campaign or business for misclassifying employees as contractors. The civil penalty for misclassification range between $5,000 and $25,000, according to California law.
Steven Paul Cohn, founder of San Jose-based Advocacy Center for Employment Law, reviewed the situation and believes Mahan’s campaign has misclassified its workers—especially if they’re young and inexperienced.
“If they don’t have a website and they don’t do community outreach to recruit business, they’re not businesses,” Cohn told San José Spotlight. “If it walks like a duck, swims like a duck, quacks like a duck, it might be somebody’s trying to duck their legal obligation here.”
It’s unlikely that all of Mahan’s campaign workers are independent contractors under the law, especially if they are high schoolers and college grads who don’t own a business, said Ruth Silver Taube, a labor and employment law lawyer and San José Spotlight columnist.
“There appears to be a problem,” Silver Taube told San José Spotlight, adding independent contractors in political campaigns are lawyers, certified accountants or people with their own businesses. “It does look like these are just young people without much experience and maybe (Mahan) is telling them what to do. You could definitely say this raises a red flag.”
To be classified as independent contractor under AB 5, Silver Taube said a worker must pass a three-prong test, where they are free from control and direction of their employer, the work is outside of the workplace’s usual course of business and the worker has routinely engaged in an independent trade, occupation or business they are hired to do.
Mahan’s campaign didn’t deny San José Spotlight’s findings and said it’s reviewing its records.
“We take these issues seriously and are re-reviewing all of our filings in an abundance of caution but just like other campaigns, and news blogs, we employ contractors,” campaign manager Matthew Quevedo told San José Spotlight.
Quevedo said the campaign followed advice from its campaign treasurer, Sharareh Rafizadeh. Rafizadeh did not respond to a request for comment.
How others are doing it
Though Quevedo said other local campaigns hire consultants, none reviewed by San José Spotlight relied solely on independent contractors instead of employees.
Chavez’s campaign reported its workers under a salary classification—not as independent contractors.
Chavez’s campaign reports workers’ compensation under “campaign workers’ salaries” in its campaign finance disclosure forms. Other candidates, such as San Jose Councilmember Sylvia Arenas running for the District 1 county supervisor seat, also report workers’ compensation the same way.
San José Spotlight reviewed finance records for six other Silicon Valley campaigns, and none listed the majority of its workers as “consultants.”
Huy Tran, a partner at Justice at Work Law Group, said the law still has lots of ambiguity.
“There can be questions, but (AB 5) did not create a black or white standard,” Tran told San José Spotlight. “The key focus of any kind of independent contractor versus employee analysis is always control and what the job is.”
Silver Taube said campaign workers are typically paid by the hour, and those at supervising levels can also take a salary—but workers in positions like coordinator and database manager should be classified as employees regardless. She raised questions about those workers being considered consultants.
“The fact that these workers receive a salary does not make them independent contractors,” she said. “They’d still be an employee and not an independent contractor.”