Call it a case of the best intentions gone awry.
Or maybe lawmakers did not have enough information with which to craft a law that would affect all independent contractors by forcing all types of businesses — from Uber and Lyft and interstate trucking services to newspapers and magazines — to essentially hire those workers as actual employees.
Or just call Assembly Bill 5 what it really is: a failure to fully appreciate the nature of workers in today’s so-called “gig economy,” who factor into many industries in which freelancers — those once ineligible for minimum wage, overtime pay, health care and other employer-provided benefits — are used on a regular basis.
Or is there actually something sinister afoot here?
Authored by Democratic Assemblywoman Lorena Gonzalez of San Diego, AB5 is based on the result of of a lawsuit, Dynamex Operations West v. Los Angeles County Superior Court, which was finally decided by the state Supreme Court in 2018. In that decision, state justices used the “ABC” test to determine an employee’s status. The test stipulates that workers may only be considered independent contractors when a business proves A. the workers are free from control and direction by the hiring company, B. work is performed outside the usual course of business of the hiring entity, and C. those workers are independently established in that trade, occupation, or business.
In the Dynamex case, workers argued they should be classified as employees because they were required to wear the company uniform and display its logo while providing their own vehicles and carrying all the costs associated with deliveries. However, that court’s ruling only applied to workers seeking minimum wage and overtime pay.
Gonzalez’s union-backed measure was supported by most Democrats in office — including those representing Pasadena and those running for president — in largely party line votes in both the Assembly and the Senate, then signed into law by Gov. Gavin Newsom.
For many people seeking benefits and minimum wage and overtime pay, the law makes sense. But for many, many others, particularly those in the news business, an industry which for decades has operated with the help of freelance writers and photographers who did not really desire those extra benefits, it spells potential ruin of not only their careers but the very industry being inappropriately regulated by the Legislature.
In an effort to have the law either stricken or amended so as to do away with the fixed number of 35 freelance submissions a year per media outlet before the law’s requirements kick in, the American Society of Journalists and Authors and the National Press Photographers Association have sued the state in federal court, claiming the new law violates the First and 14th amendments, which, respectively, guarantee a free press and due process and equal protection under the law.
In a separate federal lawsuit filed on Dec. 30, workers for Uber and Postmates, a food delivery service, also claim 14th Amendment violations. If drivers with both companies are reclassified as employees, they would be protected by laws granting workers minimum wage and overtime pay. But they would also be forced to pay into workers’ compensation and unemployment insurance. The companies would have to pay half of their payroll taxes for Medicare and Social Security, but they would also be told when to work and where. That could make the jobs less attractive to many people who seek those jobs because they want to set their own schedules.
“AB5 is an irrational and unconstitutional statute designed to target and stifle workers and companies in the on-demand economy,” states that lawsuit, which also claims the law “irreparably harms network companies and app-based independent service providers by denying their constitutional rights.”
The law has also upset independent truckers, with the California Trucking Association filing suit against the state, claiming that 70,000 drivers will be unable to work because of AB5. The new law will also apply to app-based companies and other industries in which workers once considered independent contractors must be designated as employees and made eligible for such things as minimum wage, overtime pay and insurance benefits.
As it pertains to the news business, the law prevents freelance journalists from contributing more than 35 submissions a year to the same media outlet. When it comes to news outlets, “The higher costs and loss of flexibility in assigning stories that AB5 imposes are huge problems for publishers — and likely even worse for freelance writers,” said Pasadena Now Publisher James MacPhearson.
As PW Contributing Music Editor Bliss Bowen said, “[N]o matter how worthy its intent, AB5 will more heavily burden the already decimated ranks of editors and copy editors, and could damage the quality of community papers.”
And no one wants that.
Or do they?