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socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 38132
Experience:  Retired (mostly)
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We are Hong Kong based technology and communication company.

Customer Question

Hello, we are Hong Kong based technology and communication company. We run our operation in online and from Hong Kong. We target new USA customers. We have some legal questions about our services;1) We have video dating service. We use "Find Real Romance", "Start a Real Relationship" slogans for the men in our ads and homepage. However, the girls in our service earn money. They don't actually search real romantic relationships like in Tinder, Happn. What's the possible business legal risks? And, what do you suggest to write in terms of service agreement?2) We will pay the girls USD $0.15/minute from our Hong Kong paypal account to the girls' USA paypal account. It comes to 9 dollars an hour and in some states that is below the minimum wage, including California. We don't sign any job offer, insurance or ask work permit to the girls. What's the possible business legal risks, do we violate anything as running online and remote work? If yes, how can we avoid from them?3) We will use a splash page (screenshot attached) to reach new girl models in the internet. It introduces the service and estimated revenues. Girls can sign up the service with their Facebook account and they can start to earn money by getting video call in our iOS/Android apps immediately. Does the splash page or service structure violate anything? What's the possible business legal risks? And, what do you suggest?4) Is sending to a personal paypal account internationally and regularly require any tax requirement or any tax declaration form for USA citizens/residents? If we don't, what's the possible business legal risks? And, what do you suggest?Can you give the detailed information about our questions and concerns?Thank you.
Submitted: 7 months ago.
Category: California Employment Law
Expert:  socrateaser replied 7 months ago.

Hello,

Are the "girls" actually residing in, or working while located within the territorial boundaries of California?

Customer: replied 7 months ago.
some of them.
Customer: replied 7 months ago.
The screenshot added.
Expert:  socrateaser replied 7 months ago.

Okay, thanks...you asked:

1) We have video dating service. We use "Find Real Romance", "Start a Real Relationship" slogans for the men in our ads and homepage. However, the girls in our service earn money. They don't actually search real romantic relationships like in Tinder, Happn. What's the possible business legal risks? And, what do you suggest to write in terms of service agreement?

A: Cal. Civil Code 1770(a)(9) prohibits false or misleading advertising. You propose to advertise that women are seeking a real relationship, vis-a-vis what amounts to a paid virtual escort service. The business model is in direct violation of Caifornia law. Also, and I'm sure you've already thought of this, if the "girls" routinely engage in sex with website users, while you are paying them, and the user is paying your website, then that is criminal prostitution. And, since the service is operating internationally, the crime is both state and federal in character. There is also the risk that a girl may not be an adult under California law (18 years or older). If so, then you would be engaged in child pornography and prostitution, which are extraordinarily serious criminal acts.

2) We will pay the girls USD $0.15/minute from our Hong Kong paypal account to the girls' USA paypal account. It comes to 9 dollars an hour and in some states that is below the minimum wage, including California. We don't sign any job offer, insurance or ask work permit to the girls. What's the possible business legal risks, do we violate anything as running online and remote work? If yes, how can we avoid from them?

A: Absent a written agreement carefully specifying the relationship between your organization and the workers, they will be presumed to be your employees, which means that you will violate effectively all California ad federal Labor Code and tax laws, bringing your organization within the scope of the Internal Revenue Service (IRS) for failure to remit payroll taxes, a violation which carries with it a 100% penalty, for which the owners of a business can be held personally liable.

3) We will use a splash page (screenshot attached) to reach new girl models in the internet. It introduces the service and estimated revenues. Girls can sign up the service with their Facebook account and they can start to earn money by getting video call in our iOS/Android apps immediately. Does the splash page or service structure violate anything? What's the possible business legal risks? And, what do you suggest?

A: The splash page, by itself, is not a legal risk, though it provides evidence of your other potentially illegal activities. As for what I suggest, my only suggestion is that you don't hire women to induce the use of your website, without a very stringent "vetting" and employment process, which avoids the possibility of falling into any of the previously described legal traps.

4) Is sending to a personal paypal account internationally and regularly require any tax requirement or any tax declaration form for USA citizens/residents? If we don't, what's the possible business legal risks? And, what do you suggest?

A: No. This is not an issue from a U.S. or California tax law perspective.

Note: If you're interested in trying to actually conform to the laws of the USA and California, I am a California licensed attorney, and a member of the U.S. District Court for the Central District of California (Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara, San Luis Obispo Counties). I will send you a premium services offer and we can discuss your concerns in a confidential setting.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

Customer: replied 7 months ago.
Hello, thanks. But we are not escort service. It is only video social network/service position.We service internationally (to all over the world, not only USA), we are Hong Kong company. It is just pragmatic (earning money/bonus) usage for the site users (included for men and women).Does it still violate second question (labor code and tax laws)?
Expert:  socrateaser replied 7 months ago.

In California, practically every arrangement between a business and a worker is deemed an employment relationship. California law is extremely hostile to independent contractor (1099) status. In order to be able to avoid such an arrangement, you would need a very carefully drafted independent contractor agreement. Again, if that's something in which you're interested, you may want to consider accepting the premium services offer.

If not, thenI hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

Expert:  socrateaser replied 7 months ago.

Hello again,

I see that you have asked the same question again and received a contradictory answer from a different contributor, who does not practice law in California.

Quite an entertaining read, I must say.

Thanks again for using Justanswer!

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