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January 7 2020

Two Truths And A Lie: California Employment Law AB-5

by Charlotte Whelan

Everyone loves the party game/icebreaker “two truths and a lie.” 

With the New Year came the new California employment law, AB 5, which targets the burgeoning gig economy and freelance workers. Can you identify which of the following is NOT true about the effects of AB 5? 

  1. AB 5 will simply protect workers’ rights.  

  2. Hundreds of freelance workers have already lost their jobs. 

  3. People are being stripped of the work flexibility that they seek.

 

A. FALSE

California lawmakers have argued that AB 5 is simply meant to protect workers rights, by ensuring payment of minimum wages, sick leave, and unemployment and workers’ compensation benefits. While those are certainly important entitlements for full-time workers, AB 5 targets those workers who have chosen the flexibility that freelance work and the gig economy (i.e. tech platforms like Uber, Lyft, DoorDash, and Task Rabbit) provide. Unions have taken a hit in recent years, as many workers have opted for the flexibility and freedom offered by the gig economy. By making it harder to classify workers as independent contractors, AB 5 takes away opportunity and pushes companies to get rid of contractor positions in favor of (a small number of) full-time employees.

At the same time, lawmakers are eyeing the payroll taxes that companies pay on their employees. By eliminating many gig and freelance jobs, they think it will result in increased revenue for the state. 

B. TRUE

Workers are already feeling the effects of AB 5. Vox Media laid off 200 freelance journalists in December due to stringent limitations on the number of articles that freelance journalists can submit under AB 5. While some lawmakers may dismiss this loss of work as a small setback, hundreds of workers are now without work, replaced by a much smaller number of part-time and full-time employees. Instead of being able to choose their work to fit the demands of children, family members or other priorities, these workers are simply now without any income and no flexibility. 

The gig economy, like other freelance jobs, has provided a plethora of options for people to work hard and gain extra income. AB 5 targets this hard work and ingenuity, taking away opportunity and income from innovative Americans who have found creative ways to make an income. 

C. TRUE

While there are some inherent difficulties and uncertainty associated with freelance and gig work, many workers crave the flexibility that they offer.  Whether they earn a full-time income through gigs or look to supplement their full-time job, the gig economy has flourished because workers are able to choose the opportunities that best fit their needs. Gig economy jobs are a subset of freelance work that is a hallmark of our labor force. With the implementation of AB 5, these choices are taken away, opportunities disappear, and workers will have to find less flexible situations or accept the loss of economic opportunity. 

Not only will these workers suffer with a lack of job opportunities, those who depend on their flexibility will suffer as well. Mothers who worked as freelance writers while staying home with their children will be forced to find another job which may take them away from the home and require childcare, or be forced to accept the loss of income for their family. 

America was built on an ideal of freedom. Freedom to live and work. AB 5 threatens this freedom by punishing creative ways to earn a living, all done in the name of “workers rights.” To learn more about this, read California’s New Uber Law Just Put Hundreds of Freelance Writers Out of Work





Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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