California’s Poorly Designed “Gig-Work” Law Already Having Unintended Consequences

Last year California passed a new law, known generally as AB5, designed to classify independent contractors as full employees, a status that brings associated protections under California law. The law was designed to go after Uber and Lyft, whose business model depends on drivers working as independent contractors, but it was too broad in scope, threatening to drag in workers and business far from the tech-enabled “gig work” economy.

AB5 took effect on January 1, and it’s already causing trouble. A limit on the number of articles that freelance writers could produce for one publication resulted in layoffs for some California journalists and a First Amendment lawsuit from others. Workers in more than 135 occupations claim that losing contractor status hurts them, while independent theater and arts groups are facing thousands of dollars in costs they can’t afford because they must now treat staff as employees. Lorena Gonzalez, the assemblywoman who wrote AB5, has introduced another law to remove the article cap for writers and address the status of musicians. A sign of poor legislation is the need to rewrite it immediately after it takes effect.

Uber is making changes to its app to avoid triggers that define “employment” under the law. If this workaround proves successful, then the industry that AB5 targeted will remain untouched, while other businesses will face its burdens—and other workers will lose opportunities. Trucking companies have gotten a restraining order on applying the law to their operations. The process of negotiating exemptions and modifications to the law is making progressive California a bastion of crony capitalism, with favored or powerful classes writing themselves in or out of regulation. Poorer workers and smaller companies and industries, without access to lawyers or lobbyists, will lose out. In this vein, Uber, Lyft, DoorDash, and others are planning to spend more than $100 million on a ballot measure to overturn AB5—but only for app-based drivers, leaving everyone else, from translators to rehab assistants, out in the cold.

California should stop the madness, repeal AB5, and craft a law narrowly tailored to the gig economy but broadly applied without exemptions. Uber and Lyft drivers, or movers for companies like Lugg, are neither true contractors, like architects, nor true employees, like factory workers. A better approach might include them in payroll-tax benefits such as disability and unemployment and exclude them from minimum-wage and overtime regulations, since they choose how much they will work. There would be questions to resolve—if you quit moving for Lugg after hurting your back but occasionally drive for Lyft, are you unemployed?—but such a compromise could spare Uber and Lyft the expense and risk of a ballot measure, while saving California the ignominy of aiming regulations at multibillion-dollar corporations but hitting community theater instead.

Phillip Sprincin is a veteran of the United States Marine Corps who lives in the San Francisco Bay Area.

This article was originally published by City Journal Online.

Comments

  1. Continued control over the people is the Communist way.

  2. Boris Badenov says

    There is NO WAY IN HELL that our beloved masters will admit they screw up, they will gleefully make additions that will continue to create more problems for them to ‘fix’. Then they can say they did something to be re-elected to create more of a mess.

  3. “California’s Poorly Designed “Gig-Work” Law Already Having Unintended Consequences” Yes, but look how many bills i got passed. notches on the belt. just sign it, we’ll find out what’s in it later. and, yes, the bill’s author is already backtracking. apparently these bills don’t really get discussed; are they out to a long lunch? haste does make waste. sure, it sounded high minded but the devil was in the details. enough cliches? Sackatomatoes is a cliche.

  4. What else than targeted coercion to join unions do you expect in a one-party state. All thee people got what they voted for.

  5. This is what happens when Lawmakers let special interests (This time the Unions) write the Laws.

  6. Try and ask your assembly person or state senator to repeal AB5 and they will brush you off. Reason? They have had so much negative blow-back they don’t want to touch it and may refer you to AB5’s , Gonzales, who won’t listen to you anyway. So much from the Duma in SakraMoskow. “Unintended consequences? There ain’t no unintended consequences.”

  7. This stupid AB5 needs to be REPEALED! A really smart and “feeling” Democrat would do it and gain respect but knowing the ilk behind gruesome-newsome I guess it will not happen. This is part of destroying the state of CA, SICK!

  8. Having studied the illegal Mexican alien economy in southern California for over 40 years, I have created a handbook for working in a completely underground tax free cash only economy and get rich doing it. It’s time to turn your back on the State and Federal Government Laws and fend for yourself and your family.. Everyone can do it!!

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