Economy

California's Gig Economy Is Under Attack 

"Companies can simply blacklist California writers and work with writers in other states, and that's exactly what's happening."

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A new California law intended to force employers to hire workers as employees rather than treat them as contractors is killing freelance jobs across the Golden State and leaving those contractors in limbo.

Assembly Bill 5 (A.B. 5), which took effect January 1, was drafted in response to Dynamex Operations West Inc. v. Superior Court of Los Angeles, a landmark court case that established a three-pronged test to determine whether companies are correctly classifying employees and contractors. That test says that contractors must control their workload, not perform work within the business's primary scope of operations, and be "customarily engaged" in the occupation.

Under the law, ride-share companies such as Uber and Lyft will have to reclassify their hundreds of thousands of California drivers as employees, pay them the legal minimum wage, and provide them with health care, paid time off, reimbursement for expenses, and other benefits.

"California is home to more millionaires and billionaires than anywhere else in the United States. But we also have the highest poverty rate in the country," Assemblywoman Lorena Gonzalez (D–San Diego), the architect of the law, wrote in a Washington Post op-ed last year. "One contributing factor is we have allowed a great many companies—including 'gig' companies such as Uber, Lyft, DoorDash, Handy and others—to rely on a contract workforce, which enables them to skirt labor laws, exploit working people and leave taxpayers holding the bag."

Experts in the ride-sharing industry estimate that labor costs will rise by 20–30 percent. As of now, Uber and Lyft are refusing to comply, in hopes that pending litigation or a potential November ballot measure may preserve their existing business model. If that fails, they would likely be forced to begin scheduling workers in shifts, limiting employee hours, and otherwise stripping driver jobs of the flexibility that made app-based work so alluring to begin with. Perhaps more dire is that the legislation will put people out of work: About 6,461 Lyft drivers in Gonzalez's district alone would lose their jobs, according to a study the company commissioned from the consulting firm Beacon Economics LLC.

That's a dramatic change for a business model that was built on allowing workers to set their own hours and simultaneously contract for competing companies. Uber's door is currently wide open, so long as you are 21, have a driver's license, and own a decent car. That accessibility to the job market has been a game changer for vulnerable populations. In Manhattan, for instance, first-generation immigrants who speak English as a second language make up 90 percent of app-based drivers, according to the New York City Taxi and Limousine Commission.

While A.B. 5 primarily targets gig economy behemoths like Uber, it also affects numerous other industries. It is now illegal for many types of freelancers to create more than 35 pieces of content in a year for a single company unless the company hires them as an employee. According to a new lawsuit against the state of California, many creative contractors say the limit has already wrought havoc on their livelihoods.

"By enforcing the 35-submission limit, Defendant, acting under color of state law, unconstitutionally deprives Plaintiffs' members of their freedom of speech as protected by the First and Fourteenth Amendments to the U.S. Constitution," states a suit filed by the Pacific Legal Foundation on behalf of the American Society of Journalists and Authors and the National Press Photographers Association.

In December, Vox Media announced it would not renew the contracts of around 200 California-based journalists who write for the sports website SB Nation, instead replacing those contractors with 20 part-time and full-time employees. Rev, which provides transcription services, and Scripted, which connects freelance copywriters with clients, similarly notified their California contractors that they would no longer give them work.

"Companies can simply blacklist California writers and work with writers in other states, and that's exactly what's happening," Alisha Grauso, a co-leader of California Freelance Writers United (CAFWU), says. "I don't blame them."

Gonzalez, the bill's sponsor, responded to such complaints by tweeting, "These were never good jobs. No one has ever suggested that, even freelancers."

But freelancers beg to differ. "I've been able to earn nearly three times the amount I did working a day job, doing what I absolutely love, and having more [time] to volunteer and spend time with loved ones," tweeted Jackie Lam, a financial journalist. Kelly Butler, a copywriter, echoed those sentiments: "Thousands of CA female freelancer writers, single moms, minorities, stand to lose their livelihood due to this bill," she tweeted. "I was told by a client because I live in CA they can't use me. I made $20K from them this year."

Grauso says CAFWU—the group fighting against A.B. 5— is composed primarily of the people that Gonzalez claimed her bill would help. Its membership is 72.3 percent women, which Grauso says is no coincidence. "The reality is it still falls primarily on women to be the caretakers and caregivers of their families, and freelancing allows women to be stay-at-home mothers or to care for an aging parent," she notes. "Being made employees kills their flexibility and ability to be home when needed. I cannot stress enough how anti-women this bill is."

The 35-piece-per-company limit comes out to less than one piece per week. That means anyone who writes a weekly column, for instance, is likely out of a job unless her publisher hires her as an employee. The law also penalizes freelancers who create content in nontraditional formats, such as blog posts, transcriptions, and listicles—the latter of which are often requested in bulk and take only "about 20 minutes to compile," according to freelance journalist and brand strategist Vanessa McGrady.

According to The Hollywood Reporter, Gonzalez initially set the annual limit at 26 pieces but later changed it to 35 after a backlash. "Was it a little arbitrary? Yeah," Gonzalez admitted to the Reporter. "Writing bills with numbers like that are a little bit arbitrary."

In December, the assemblywoman tweeted that unemployment trending down is "useless" because "people have to work 2-3 jobs or a side hustle" to make ends meet. According to the most recent Census data, only 8.3 percent of American workers have more than one job. But freelancers "shouldn't fucking have to" work multiple jobs, Gonzalez told a detractor on Twitter. "And until you or anyone else that wants to bitch about AB5 puts out cognizant policy proposals to curb this chaos, you can keep your criticism anonymous."

Fortunately, critics did not stay quiet, and on February 7,  Gonzalez announced on Twitter that "based on dozens of meetings with freelance journalists & photographers," she was moving to "cut out the 35 submission cap." There was no indication as of press time that ride-share drivers could expect a similar reprieve.

NEXT: Brickbat: Well, It Is Called the 'Show Me State'

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  1. “By enforcing the 35-submission limit, Defendant, acting under color of state law, unconstitutionally deprives Plaintiffs’ members of their freedom of speech as protected by the First and Fourteenth Amendments to the U.S. Constitution,” states a suit filed by the Pacific Legal Foundation on behalf of the American Society of Journalists and Authors and the National Press Photographers Association.

    I’d be surprised if this held up The law doesn’t prevent people from writing, it prevents people from being paid to write as freelancers after a certain number of submissions per year to the same publisher. Articles 36 and up can still be posted on the author’s personal blog for free, submitted to other publishers, and may even be submitted to the same publisher without being paid for it.

    The law is still horrible for many other reasons though, and will hopefully be repealed ASAP.

    1. If the goverment can dictate terms of employment, I dont see why it shouldnt be able to do this.

      You reap what you sow.

    2. It isn’t freedom of speech they should be arguing for, but freedom of association.

    3. I’ve heard that a few other places are trying to copy it, like DC. How stupid can these assholes get?

      1. As somebody who was misclassified as a gig worker–the thing that would be distinctly more useful to us (misclassified or not) is to not have to go to court just to know for sure. That is kiiinda expensive. A checklist or the like that doesn’t need to be definitive but provide safe harbor for both parties (so if the IRS decides I’m an employee they can only apply that on future taxes, for example) would do that.

        Though I would definitely suggest having one of the main factors being the individual worker’s ability to negotiate terms.

    4. Per Citizens United v FEC, restricting money tied directly to speech is tantamount to restricting speech. Is being paid for speech is the same thing as paying for speech? I think it’s reasonable to argue they’re closely allied, and a law prohibiting people from producing more than X many books or movies or whatever *in general* per year would not pass constitutional muster. Likewise, depriving someone of the ability to make an income on first amendment activities is problematic.

      On the other hand, the law here is content-neutral – it doesn’t care what kind of speech you’re engaging in, it just cares about a number, which is an important distinction from the campaign finance laws.

    5. A person might write the 52 weeklies, receive pay for only 35 installments but at a higher rate.

      errrr, if there were freedom of contract, they could.

  2. So the freelance journalists are going to scream enough to get a carveout but leave everyone else hurt by AB5 to suck it.

    1. Exactly – and then they’ll continue to promote the people who tend to pass laws like that. Laws are always meant for the other person… That’s why they’re so good!

  3. By all means let the tech companies drive the prevailing wage to zero,
    Nearly 40 percent in fees

    Write an app, make billions let the actual people who work for a living suck wind

    screw uber

    As to writers, if you write every week for one company, you are an employee. If you write for a bunch of companies on a regular basis, freelancer

    1. Your last sentence is in conflict with the text of the law.

    2. If you don’t like Uber, you don’t have to work for them.

      But who are you to tell the thousands of people who do want to work for them that they can’t?

      1. That’s the most galling aspect. “I’m from the government, and I’m here to help, whether you like it or not, whether it hurts or not. You WILL be helped, believe me, because I define ‘help’.”

        1. We are from the government and we are here to help – bend over.

    3. Uber goes down. DUI goes up.

      1. There’s the hidden motive. It’s always about revenue.

    4. “By all means let the tech companies drive the prevailing wage to zero,…”

      Are you paid to post such bullshit?
      I find it hard to believe someone would, without being paid, prove themselves to be such a fucking imbecile.

    5. Write an app, make billions let the actual people who work for a living suck wind

      Because writing an app, getting a business model together, lining up investors, technical support, etc – none of that is ‘real work’, amirite?

      Fucking morons keep insisting that anything they don’t know how to do must be easy. Marxist morons keep insisting that providing capital provides no value to workers.

    6. What if I write every week for many companies? Am I an employee of all of them?

    7. Everything is so terrible and unfair.

      Haha

  4. Under the law, ride-share companies such as Uber and Lyft will have to reclassify their hundreds of thousands of California drivers as employees, pay them the legal minimum wage, and provide them with health care, paid time off, reimbursement for expenses, and other benefits.

    Next: “Under the law, California will have to reclassify their millions of residents as employees, pay them the legal minimum wage, and provide them with health care, paid time off, reimbursement for expenses, and other benefits.”

  5. Politicians are constantly trying to glom onto something that demonstrates they’re out in front leading a crowd. A crowd that may not even exist. Which seems to be the case in this case.

  6. Proper headline:
    “California continues relentless attack on all personal freedoms”

  7. It just shows how politicians are luddites and can’t stand market evolution because it affects their base.

    On the other hand, Californians deserve this as they vote these people into office. They just believe it will only affect someone else.

    1. “It just shows how politicians are Luddites.”

      I’ve been wondering why they pushed for this. What is the benefit to them or their contributors? Who is the winner here? I finally realize I was giving them too much credit for being (deviously) intelligent and cunning. These politicians are just mentally impaired. If they weren’t in the legislature, they would be licking windows.

      1. The winner is the politicians; getting more contributions from unions, and having more power because of all the unemployment this causes..

        1. And support/votes from people who work full time jobs and think this helps those poor mouth breathers who don’t know well enough to not get taken advantage of

      2. This is a ploy for the unions. There are two ways to look at it.

        How they would put is it that any rational person would want to be unionized, and this will enable people to flock to union jobs to protect them.

        How their opponents see it is that once the people are employees, they can be strong-armed into unionization by standard thug tactics, up to and including assault and sabotage. Crimes committed by union violence are considered non-prosecutable and are routinely ignored. These new, dues-paying union members will drive up revenues for the political machines, which feed back into the Democratic base.

        Neither view is wholly without merit, but I find cynicism is more accurate most of the time.

        1. Actually, it seems like the unions are the most annoyed here. I think they just missed that these are usually the quieter ones who actually don’t usually spend their money on politics because they have better things to spend it on.

          Doesn’t help that unions are overall dying because they have generally become parasitic once they get past the local. The people running the local know its members do not just know them, but knows where they live and can, if needed, turn up with torches and pitchforks. Things like that can very much discourage corruption.

          1. can, if needed, turn up with torches and pitchforks. Things like that can very much discourage corruption.

            Has that happened somewhere over union corruption?

      3. The unions were behind the deal.

    2. While it’s true that California has some of the worse performing schools and the poorest and most littered roads, we can boast that we have the highest income and gas taxes of just about anywhere else in the country. We all know that government control and higher taxes are good so why is everyone complaining.

    3. While some of this is stupidity, some of it is actually reasonable.

      The fact is that we have protections for full-time employees and things like minimum wage for a reason – we don’t want people to be burdens on society, and we also want to discourage certain antisocial behaviors (like working while sick). If a job isn’t worth $X per hour, it’s too inefficient to be done by Americans, and we’d rather that person do something else in the workforce rather than live on a poverty wage and have to receive public benefits.

  8. If you think California’s gig economy is under attack, you should see what they’re doing to the regular economy. Ever seen a pack of lions taking down a water buffalo? It’s kind of like that.

    1. A pack? Is that like a union? Totes OK.

    2. The irony is that online freelancers such as writers bring money into the local economy that would have NEVER otherwise been there! Government should be ENCOURAGING their workers to work online and bring money in. But of course they can’t see past their stupid faces.

  9. Whoever made that stock photo doesn’t know geography. You can’t drive west out of California.

    1. Or it’s a sunrise and they do know geography.

      1. There is no way that is a sunrise.

        1. That is a sunrise, early sunrise, cloudy sky.

          And they’re seeing the sun of freedom rise for the first time.

          1. That is clearly riding off into the setting sun.

        2. Morning like the “globe” is a conspiracy from the elites. I’ve never seen it, therefore it doesn’t exist.

      2. Or it’s someone who’s given up and is driving off the Santa Monica pier.

    2. “You can’t drive west out of California.” — Please don’t announce that. They might migrate East and EAT some more states.

      Go West, Go West!!!

  10. Seems to me that Hollywood is a pretty big industry in California, and most of the people who work in that business, from lighting rigger and ADR mixer all the way up to directors and movie stars, are freelancers.

    How Iong before Hollywood honchos order a hit on this fool?

    1. I think most of those people are unionized, and unions are always exempt from stupid labor laws because the people who write stupid labor laws get elected with union money.

      Hell, even the commies running for president are figuring out ways to exempt unions from Medicare for All, they know not to bite the hand that feeds.

      1. ALL of CA citizens will join the GOV WORKERS UNION by LAW!!!
        That’s really as clear as day what this law states.

  11. “Was it a little arbitrary? Yeah,” Gonzalez admitted to the Reporter. “Writing bills with numbers like that are a little bit arbitrary.”

    “Here’s your paycheck, Ms. Gonzalez. What’s that? You mean 45 cents isn’t right? Well, writing checks with numbers like that are a little bit arbitrary, don’t you know? I’m sure you understand.”

  12. It’ not even clear to me that AB5 applies to Uber or Lyft in any meaningful way. They aren’t taxi companies. They don’t employ any drivers. They’re a software company which connects drivers to customers and handles billing – both entirely separate activities from the driving itself.

    Imagine if there was a taxi company who subcontracted with Uber to connect their drivers to riders and handle their billing. Uber would charge them fees for these services. Nothing weird going on there – businesses outsource these sorts of things all the time.

    So why does that change if, instead of taxi companies with multiple employees, it’s a bunch of small one-person ‘taxi companies’ doing the subcontracting?

    1. That wouldn’t pass the laugh test. If you cannot argue a case in court without the judge laughing at you, then it’s not valid, no matter how well reasoned.

      1. Why wouldn’t it? It’s 100% true. The employees of Uber do not give people rides. They never have.

    2. It’ not even clear to me that AB5 applies to Uber or Lyft in any meaningful way. They aren’t taxi companies. They don’t employ any drivers. They’re a software company which connects drivers to customers and handles billing – both entirely separate activities from the driving itself.

      Because politicians have a need to make the economy ‘legible’. That means they must push everything into a limited number of boxes in order to simplify it enough to understand it so they can control it.

      Which is why some cities believe they must (and can) determine the ‘proper’ number of taxis in a city. And how a taxi must differ from a limousine service. Which is why taxi medallions can go for several hundred thousand dollars in some places.

    3. I think you’re 100% right. The employees of Uber have never given somebody a ride, they only connect riders and drivers.

      Leave it to the government to go after a specific group and then write a law that fails to encompass them.

    4. Because it’s a pretense to avoid being subject to labor laws. They absolutely work for Lyft and Uber. For example, “I’m a driver for Uber and Lyft”, which is the headline of an article on Business Insider talking about what having a job with Uber and Lyft is like.

      The reality is that these “independent contractors” aren’t actually independent contractors in any meaningful way, they’re employees who the company pretends aren’t employees to try and dodge labor laws and taxes.

      1. Except they get to work their own hours and aren’t forced to take riders. Oh, and they get to “work” for the competition at the EXACT SAME TIME as you.

        People like driving for rideshares because they can do it whenever it is convenient.

  13. The gig exhibit isn’t responsible for California’s poverty rate, it’s high taxes, progressive policies, and millions of illegals.

    1. What do illegals have to do with non-illegals being screwed by government regulation and meddling? Do you think any legal would do the work the illegals do?

      1. It would be a big step for the working “legals” to find the time to start out-voting the welfare-lynching “illegals”.

    2. It’s actually almost entirely due to demographics. The overall poverty rate there is 13.3%. The Hispanic poverty rate there is like 28%.

  14. Gonzalez, keeping it classy.

  15. and leaving those contractors in limbo.

    They’re not in limbo, man. Limbo is a state of uncertainty. There’s no uncertainty here – they’ve been laid off and they won’t be able to go back to work the same way. Their fate is certain – they need to L2C;)

  16. “California is home to more millionaires and billionaires than anywhere else in the United States. But we also have the highest poverty rate in the country,” Assemblywoman Lorena Gonzalez (D–San Diego), the architect of the law, wrote in a Washington Post op-ed last year. “One contributing factor is we have allowed a great many companies—including ‘gig’ companies such as Uber, Lyft, DoorDash, Handy and others—to rely on a contract workforce, which enables them to skirt labor laws, exploit working people and leave taxpayers holding the bag.”

    Gonzales is saying here that somehow in the last 10 years the ‘sharing economy’ made California so ‘unequal’. That before Uber the CA Gini coefficient was significantly lower.

    That the sharing economy has made so many Californians poorer – which is why so many of them participate in gig-work?

    1. Yeah, it’s definitely the gig economy causing the disparity and not the fact that the state intentionally imports as much unskilled labor as it can.

      Turns out when you bring in 10 fruit pickers for every coder, the wealth gap grows.

      1. Fruit pickers make a pretty decent wage man.

    2. Communism always = income inequality…
      Communist China is the income inequality holder of the world.

      The real Democratic Platform – Champion the opposite of what it really is.

  17. I find it amusing that a bunch of left wingers are getting ganked by their own heroes. Although, it seems a simple workaround, create some corporation in another state, become an employee of your own entity, have that entity get paid by out of state owners of publications that may or may not distribute into CA, then pay yourself with K-1 income.

    1. That’s not an easy nor simple thing to do. And there are some decent expenses associated with it.

  18. Remember, folks. Predictable consequences are never unintended.

    1. ….. but my lefty rag and politician promised me I could defy reason by charging those ‘greedy taxpayers’ for all the consequences. They told me it was FREE!!!!

    2. And people were shouting from the rooftops about the problems with this bill since it showed up. Thus, the growing number of exemptions. Because as a CA freelancer I would totally feel safe knowing my profession can be eliminated at any time by the whim of a bureaucrat.

  19. With regard to CA workers not being able to get paid for writing more than 35 articles per year for a publication, what would stop said writer from “working” for an out of state company that would then submit the article for publication into CA? The writer isn’t working directly for the CA company and would therefore be exempt from the regulations. In theory would they also be exempt from CA employment taxes?

    1. It’s called “joint-employer liability”. They rigged the definition specifically to be sure that they could extend their reach to subcontractors such as you describe. That’s not to say that subcontracting can’t be done but it is really hard to do right and to not get swept into their absurdly broad definitions.

  20. If these motherfuckers kill my sweet freelance gig because they their wish and take this shit national, I’m gonna fucking lose it.

  21. Assemblywoman Lorena Gonzalez (D–San Diego), the architect of the law, wrote in a Washington Post op-ed last year……..” which enables them to skirt labor laws, exploit working people and leave taxpayers holding the bag.”

    It sounds like illegal aliens which the state protects. http://www.aviac.us

  22. I am making 7 to 6 dollar par hour at home on laptop ,, This is make happy But now i am Working 4 hour Dailly and make 40 dollar Easily .. This is enough for me to happy my family..how ?? i am making this so u can do it Easily… Read More

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