The California state legislature just passed Assembly Bill 5 (AB5) and the governor is expected to sign the bill any day now. From the Headlines, you’d think the passing of this legislation was a win-win for everyone but greedy corporations.. For example:
“Gig workers’ win in California is a victory for workers everywhere: Millions of people have been working without basic labor protections” by Alexia Fernández Campbell/Vox. September 11, 2019
The gist of the legislation is the “ABC test” that will now be used in California to determine whether a worker is an independent contractor or employee. To wit, a worker can only be considered a contractor if they are:
A) Free from the “control and direction” of the company they’re working for.
B) Performing work that is “outside the course” of the company’s usual business.
C) Have their own independently established trade, occupation, or business.
So if you’re a self-employed freelancer making a good living helping out businesses on special projects or during temporary staff shortages, if you’re doing work within the course of the company’s usual business, then you must cease and desist from offering your services as an independent contractor. Your options are to register with a temporary employment agency, which technically is your employer, seek work as an employee, or figure out some way to game the new system.
In other words, this legislation affects way more than just gig workers. That’s why so many occupational groups lobbied for and were granted exemptions from the law, including:
Doctors, psychologists, dentists and podiatrists, Insurance agents, stock brokers, lawyers, accountants, engineers, veterinarians, direct sellers, real estate agents, hairstylists and barbers, aestheticians, commercial fishermen, marketing professionals, travel agents, graphic designers, grant writers, fine artists, enrolled agents, payment processing agents, repossession agents, human resources administrators, and photographers, photojournalists, freelance writers, editors or newspaper cartoonists who make 35 or fewer submissions a year to a single publication.
Why were they exempted from the new law? The usual explanation is that individuals who work in these occupations are licensed professionals able to negotiate their own fees, but that is hogwash, because not all the occupations require licenses or are considered “professions” and many of the non-exempted workers are licensed professionals and also able to negotiate their own fees. Here are some of the non-exempted occupations:
Franchise owners, owner-operator truck drivers, nurse anesthetists, occupational therapists, speech therapists, optometrists, nurse practitioners, physician assistants, radiation therapists, clinical counselors, marriage and family therapists, clinical social workers, respiratory therapists and audiologists, language translators, janitors, youth sports coaches, construction workers, manicurists, medical technicians, nightclub strippers, and software coders.
You know what? There are way more of these workers in California - more than a million, according to one estimate - than the number of what we think of as “gig-economy” workers. For instance, there are over 75,000 franchise business owners (think fast food, retail, restaurant, business services, fitness centers, hotels, gas stations, car repair, home repair….), as well as over 70,000 owner-operator truck drivers. You think these guys are happy with the new law? Not.
Think about it: the average independent truck driver in California is 55 and has been an owner-operator for 18 years. As a former career counselor, I had lots of middle-aged clients with driving experience who wanted to become owner-operator truck drivers because of the freedom and flexibility it offered their aging bodies. Many also had plans to eventually expand their trucking business and hire employees. For them, being a sole proprietor was a stepping stone to becoming an employer. This is the stuff of American Dreams. It’s no wonder truck drivers (and franchise owners) vigorously protested this new law.
As for all those healthcare professionals, California hospitals depend on their services as contract workers, filling in the gap when patient loads temporarily exceed staff capacity. As professionals, they make good money and can negotiate their own rates - just like physicians who are exempt from the new law. Why aren’t these workers exempt as well? I’m thinking it’s because they lack political clout, unlike the AMA.*
Are some gig-workers abused by companies? Are some misclassified as independent contractors when they should be classified as employees? Should there be legislative and legal remedies for these workers? Yes on all counts. But the California gig-worker law is the wrong remedy. Too much collateral damage.
* California’s gig-worker law helps the doctors keep the other medical professionals in their place. Note that the AMA has lobbied against rules allowing nurse practitioners to provide primary care without being supervised by physicians.
“Some sectors warn that AB5 could hurt workers, raise prices” Carolyn Said/San Francisco Chronicle September 5, 2019