In September, California passed Assembly Bill 5 (AB5), a bill that would force many employers to classify part-time or occasional workers as full-time employees. In doing so, they ignored many warnings that the legislation would put freelance workers out of business. Now, freelancers are suffering the consequences of the California legislature’s thoughtless actions.
Businesses generally assign workers one of two employment classifications. Independent contractors enjoy a flexible schedule and are answerable to the business they contract for only insofar as the contract between them specifies. That gives them the flexibility to work on their own schedule and contract with other companies as well, among other features. Employees, on the other hand, have their hours and workflow managed directly by a business, but are entitled to employment benefits and a more strict requirements regarding separation, for example.
AB5 sought to force employers to reclassify independent contractors as employees, thereby “protecting” them from exploitative employment circumstances. The problem here is that the full-time employee model is rigid and inflexible, and attempting to force contractors into this box often makes the professional relationship untenable. In other words, a business that can afford to pay a contractor intermittently as a freelancer is not necessarily able to offer that same contractor 40 hours a week, healthcare and retirement benefits, and managerial oversight.
Californians are now learning this lesson the hard way. Contractors across multiple industries have been finding out ahead of the law’s January 1 implementation date that the freelance model they rely upon for their livelihoods is no longer legal in the state of California. Most notably, Vox Media recently announced that it would be cutting “hundreds” of freelance writing jobs ahead of the California law (after Vox.com writers cheered the passage of AB5).
But it’s not just writers that are affected. The California Trucking Association, representing about 70,000 truckers, filed suit against AB5 arguing that it threatens their livelihoods and represents an unconstitutional burden on interstate commerce. Contractors for gig-economy companies like Uber, Lyft, and DoorDash are safe for now — the companies are claiming that their workers still fit as independent contractors under AB5’s stricter regulations — but that could change should California choose to crack down.
California’s not the only state currently making this mistake. New Jersey also passed a similar bill in November that also threatens to put many independent contractors out of work. New York may soon follow suit.
States should learn from the lessons of California’s developing disaster. While the plight of Vox freelancers has been the subject of much social media ridicule, the reality is that hundreds of American workers are losing their livelihoods right before Christmas because lawmakers refused to listen to the workers who are affected by these bills.
None of this is to say there isn’t room for reform of outdated employment law, but applying outdated classifications to developing models like the gig economy is doomed to failure. Congress and states should instead be encouraged to investigate creating new, more flexible classifications that provide gig economy workers, freelancers, and other contractors with more stability and access to benefits while at the same time preserving the independence and flexibility that makes the work so attractive to many Americans.
Even by California’s dismal standards, 2019 has not been a banner year for smart policymaking. From harmful data privacy laws, unconstitutional taxes on residents of other states, and now putting freelancers out of work, the state has spent much of the year as a spawning ground for bad policy ideas. Maybe it could take one small step in the right direction by listening to the concerns of workers affected by its reckless policymaking. Maybe.
Andrew Wilford (@PolicyWilford) is a policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to fiscal policy analysis and education at all levels of government.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.