Most rideshare drivers say that the freedom of working as independent contractors who set their own hours is one the work’s biggest attractions. But Assembly Bill 5, which became law on January 1, seeks to force Lyft and Uber to make such drivers employees thereby eliminating their independence.
Assembly Bill 5 continues to shake San Diego’s — and California’s — independent contractors, even as state lawmakers scramble to amend it. Many people have been hurt by the bill and are saying it loudly whether by attacking the law’s sponsor, Assemblywoman Lorena Gonzalez of San Diego on social media, flooding legislature offices with calls, or forming Facebook groups to kvetch and organize opposition.
San Diego Assemblywoman Lorena Gonzalez has taken a lot of heat for sponsoring the law which illegalizes much of California’s gig economy.
Artists and musicians, Uber and Lyft drivers, and freelance journalists are among the 600,000 to 3.5 million California independent contractors across a broad spectrum of industries trying to figure out how to earn a living in a state that will no longer allow them to control their own work. Also affected by the new law: graphic designers, golf professionals, event planners, contract teachers, virtual assistants, interpreters, translators, travel nurses, and many more.
Abigail (not her real name), from northern San Diego, is a music industry professional who for more than two decades has followed the rules for self-employed independent contractors — paying state and federal taxes, obtaining and maintaining current business licenses. She’s certain AB5 will kill her ability to continue. “I don’t want to be in the middle of this shit-show,” she says. “I’ve been in San Diego for 30 years and I’ve been building my business for 25 years, and now the state is taking that away from me. I feel like California really doesn’t want us here anymore.”
Opposition is mounting, is this sampling of Facebook groups against Assembly Bill 5 suggests.
That sentiment has been echoing across California as tens (possibly hundreds) of thousands of people are losing their independence and incomes. The bill was meant to target companies such as Uber, Lyft, and Postmates. Those pseudo employers, the drivers, and others — especially freelance writers — have been able to make their case both in the courts and social media, while many others go unheard.
Multiple attempts via phone and email to get Assemblywoman Gonzalez to answer questions have gone without response. One of the key questions is who actually wrote the language of the bill. Many believe it was written by labor unions.
California’s Employment Development Department is charged with the task of going after businesses and companies that use independent contractors and force them to hire those workers. Consequently, freelancers from forensic nurses to movie industry professionals are being financially hurt, because the state is threatening their clients.
Karen Anderson has been collecting individual stories from these displaced contractors, “I think this may be the end of the movie industry in California,” Anderson says. “So many of the jobs like casting and camera crews are contract work and project by project.”
Christmas 2020 may be the first with a Santa Claus shortage, since most are independent contractors. Sheep may go unshorn — most shearing is seasonal contract work — and sign language interpreters for the deaf may be put out of work. Trainers and instructors in the fitness industry are worried.
Some industries got exceptions, others didn’t. Insiders say the professions that hired lobbyists had the best chance of keeping their clients. For example, physicians got exceptions, chiropractors did not. Veterinarians who gig around got an exception, veterinary technicians did not. Real estate agents are exempt, mortgage brokers are not.
Abigail sells her services and hires other music industry professionals, and she is pretty sure that she can’t do either under the terms of AB5. “Every job I lose means between two and 20 jobs I don’t hire for and facility time I don’t book and pay for,” she says. “The net effect of AB5 is that it is hurting small businesses all over the state.”
She doesn’t want a full-time salaried employee job, and there isn’t one similar to her current work in San Diego anyway, she said. “I’m raising a young child, and running my own business lets me spend my time doing that,” she says. “Working part-time means I don’t lose my contacts and I keep up with the technology that changes so fast in my industry.”
She has already lost a long-time client who specifically cited AB5 when she explained she had to break a contract signed last fall for work in January. “The artist’s manager said, ‘I am so sorry but we can’t continue to work with you or with anyone in California,’” Abigail says.
Another client — a large entertainment company in Los Angeles — told her they are doing an internal audit to identify creative vendors who aren’t limited liability corporations or S corporations. “They’re trying to figure out how to comply with this new law, because they don’t want to be the company that has to test it through the courts.”
Abigail adds, “No one in my line of work is looking for traditional employment. There are certain jobs in the music industry that have always been contract or freelance.”
Right now, there’s no clear path around the bill. Nor is anyone sure exactly how many people are self-employed independent contractors whose livelihoods are in peril. The U.S. Bureau of Labor Statistics hasn’t been able to figure out how to count them, a spokesman said. The Internal Revenue Service can point to about 3.6 million sole proprietor tax forms and about 600,000 people taking the self-employed health insurance credit in California for the year 2017. But those numbers define quite a range.
UC Berkeley’s Sara Thomason, who studies the gig worker economy, says part of the confusion results from the mix of full-time freelancers and those who have regular jobs but then freelance on the side, such as a teacher who is a rideshare driver at night.
The self-employed health insurance deduction is equally problematic since many have spouses who obtain family insurance coverage at their jobs.
“The singular focus on Uber,” wrote Thomason and co-author Annette Bernhardt in a 2017 piece for the UC Berkeley Labor Center “is impeding our ability to get an accurate understanding of what has (and has not) changed in the workplace — and the policy solutions that are needed. While the prevailing narrative is that there has been substantial growth in ‘gig’ work, it’s been surprisingly difficult to confirm the trend, partly because of the lack of good data. Exacerbating the problem is very different definitions of gig work.”
The same lack of clear definitions applies to the terms sharing economy, contingent work, freelancing, precarious work, independent work, contracted work, temp work, and so forth. The result is widely varying estimates about how common this type of work is in California. Though the California Employment Development Department easily identified about 1 million employers — and notified them by letter in December that they must comply with AB5 — they confirm that the department has no idea of how many self-employed people are losing work.
But the department, in an email, says they stand ready to help people who lost their jobs through no fault of their own. What kind of help they can offer isn’t clear, but most freelancers don’t believe they qualify for unemployment benefits.
The department’s public information officer confirmed that the department received no additional funding from the legislature to help affected independent contractors.
Maria (a pseudonym), is a forensic nurse who has contracts or agreements with several hospitals in a neighboring county. Several of those hospitals received the EDD letter. Forensic nurses are experts who care for sexual assault, domestic violence, and elder abuse victims. They both provide nursing and gather evidence for trial. There are only a few full-time jobs in her field. Palomar Medical Center has a team, for example. But most of the calls for her help are sporadic and come from hospitals or from prosecutors’ offices when needed.
“There are so few of us, we don’t fit into any description box,” she says. “I am really worried about the care that victims will receive. I’m sure the nurses are caring, but they just don’t have the training either to identify and protect evidence or to deal with someone who has been assaulted.”
Golf pros are worried too, from caddies to the instructors who teach at schools and golf courses. But Craig Kessler, the Southern California Golf Association’s director of governmental affairs, says that many golf pros are going to qualify for an exemption. Some of the independent contractors who teach earn well into six figures, he says.
The military courses already let their contractors go when the state supreme court decision that triggered AB5 came down two years ago, he says. “Teaching the game is important to the long-term success of golf.”
Some exceptions and provisions just left people scratching their heads. Real estate brokers, for example are exempt from the law, but mortgage brokers are not. Shawna is a San Diego-based event planner. She’s self-employed but with a company set up that the IRS sees as a business entity.
“When they hire me,” she explains, “I’m totally fine. But if I decide to subcontract and hire a band, whether my client pays for it or I pay for it, it’s those people who are in trouble. Somebody has to be in charge of that band. I have to hire specialty services to make my conference happen. I have to hire an audio video tech. I have to hire security. Since they’re not event planners, I’m ok. But they have to show they have an employer or they’ve got problems. If it’s a large conference and I bring in another meeting planner to help me, then I am in trouble. There can’t be two of me.”
Shawna got that advice from her assembly member after she and a group met with him to voice their concerns and he sought advice.
There’s a lot of conversation around tweaking the bill — adding chiropractors to the medical exemption given to doctors, for example. One veterinarian who fills in for staff veterinarians while they take time off observed that the professions that have associations and lobbyists were able to plead their cases — while less organized professions didn’t.
“It’s a terrible law,” says a chiropractor who contracts as a fill-in. “We don’t even know how many people are self-employed, but we know a lot of them just got put out of work. You can tweak it forever — they will have to — but the more exceptions, the more it hurts people who aren’t rich or powerful enough to be heard.”