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California's Attacks on the Gig Economy End Up Hurting Neighborhood Barbers, Tattoo Artists

A state supreme court ruling jeopardizes the very idea of independent contractors in several trades.

Barber shopDreamstime Agency / Dreamstime.comWant a job where you determine your own hours, set your own prices, and build your own personal brand? Stay away from California.

A California Supreme Court decision has redefined what constitutes a private contractor—a person who provides his or her services as an independent worker, not as an employee—and it looks like it is going to wreck people's lives.

Certain work in the service sector—hair stylists, tattoo artists, taxi and limo drivers—are filled with people who are contractors, not workers paid by the hour. They are able to set their own hours and determine the terms that they work with the business owners. This reduces overhead costs on the business owner, who then doesn't have provide additional benefits.

But the impact of a court case ruled on back in April is now throwing that relationship in disarray. The canary in the coal mine is Bottle & Barlow's, a combination barber shop and bar. Last week, all the barbers quit (seven of them), leaving the owner in a bit of a bind.

The state's Supreme Court in Dynamex v. Superior Court of Los Angeles County ruled that a company had improperly reclassified its drivers from employees to contractors. In this decision, it establishes some completely new parameters determining whether somebody is to be considered an independent contractor. The most important—and potentially damaging—is that an independent contractor's work must "fall outside the usual course" of what the business does. Put differently, the contractor cannot be involved in the same work as the company.

This means that businesses like barber shops and tattoo parlors must fully employ those who cut hair or provide tattoos. Yet in many cases, neither party wants that. As the Sacramento Bee notes, it was the barbers who decided to quit Bottle & Barlow's rather than become wage-slaves:

Many hairstylists get into the trade for its flexible hours and opportunity for entrepreneurship, leaving the prospect of being an employee with set work times and withheld taxes unappealing, [owner Anthony] Giannotti said. On his end, it means paying workers upwards of $30 and hour in the next 2 to 4 years.

"They have really gutted us," he said. "You can't hire and structure things the way (barbershops) have for decades. They've just destroyed the pay structure for the barber and cosmetology industry."

CBS' Sacramento affiliate includes an owner of a tattoo parlor in its story, wondering what on earth she's going to pay them and how the shop would survive.

The state court's decision is clearly based on the assumption that the contractors are dealing with big corporations, and it does not seem terribly concerned about the tiny margins by which many in the service sector survive. And as a couple of labor attorneys with firm Fisher Phillips note bluntly, when these new rules determine who is allowed to be classified as an independent contractor, "Conspicuously absent from the test is worker preference."

Labor unions have supported the ruling and the new classifications, which clearly are intended to screw over the "gig economy." That it affects barbers and tattoo artists in addition to the Uber drivers they loathe is a reminder that this whole concept of a "gig economy" is not actually a new trend. Far from being a way for big corporations to screw over the proletariat, these contracts make it easier for working-class people to work on their own terms.

Photo Credit: Dreamstime Agency / Dreamstime.com

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  • loveconstitution1789||

    Gotta bring as many of the unwilling into the welfare sphere as possible with mandates on healthcare, minimum wage, social security, etc.

    See the similarities with the Unions wanting to bring more contributors into the fold, whether they benefit or not?

    Its all a racket.

  • Juice||

    By "etc." I assume you mean E-Verify?

  • MoreFreedom||

    It's not so much getting workers on welfare rather than working. A lot of the reason is state unemployment tax collections, income tax collection (can't have those independent contractors deducting so many expenses of employment such as their car) and as you say health care, social security and HR regulations (minimum wage).

    The simple way to look at it, is the government wants to butt into the employer/contractor relationship, control it, and tax it. Their goal is to extract all they can from the industry. It's the old game of changing government from one that protects our lives, liberty and pursuit of happiness, into one whereby the government becomes a bunch of leeches sucking the blood from the productive via their ability to use force against individuals. Rather than protecting us, it exposes us to a bunch of immoral leeches that harm us.

  • Canned Peaches||

    Off the top, it costs business in California eight-hundred dollars a year just to be in business. Wow. This really rearranges a lot of people's lives.

  • Fist of Etiquette||

    ...and it looks like it is going to wreck people's lives.

    Workers' paradise isn't for everyone.

  • Jerryskids||

    And OT grammar gripe: On his end, it means paying workers upwards of $30 and hour in the next 2 to 4 years. Yes, that is and accurate quote, and article in and important and respected newspaper used the indefinite article "and" instead of and archaic indefinite article such as "an". I see this more and more, and it's and aggravating trend, where people don't seem to differentiate between and occasion to use the word "and" and and occasion to use the word "an". Is this just and errant auto-correct feature? Or is it and absence of understanding how the English language works?

  • Don't look at me.||

    Some of us have the ability to skip over tiny errors like that and lead happier lives.

  • Weygand||

    "Some of us have the ability to skip over tiny errors like that and lead happier lives"

    Ignorance is bliss....

  • ||

    We're supposed to be reading these things? If I wanted to drink and read I'd join my wife's book club.

  • My Dog Bites Better Than Yours||

    Yes, that is and accurate quote, and article in and important and respected newspaper used the indefinite article "and" instead of and archaic indefinite article such as "an".

    Not sure what point you're trying make. Also, had trouble reading this, but I figure you meant "... an article in an important and respected newspaper ...

    Is this Muphry's Law in action?

  • Ornithorhynchus||

    He was purposely using 'and' in place of 'an' to make his point. You were supposed to have some difficulty reading it. This was to demonstrate how improper use of a word damages reading comprehension.

    I thought this was obvious.

  • Mickey Rat||

    "And" is not an article. It is a conjunction, which is a completely different function.

  • BigT||

    Jerkyskids, extract your head from your asp.

  • Wise Old Fool||

    Go to a fucking editor's convention and leave the rest of us alone. We don't care about small editorial mistakes. We care about content.

  • Don't look at me.||

    Control. Must have control.

  • Let freedom ring||

    It is by no means a cure all for this horrible ruling, but the failure of the libertarian/conservative establishment to come to grips with the nature of the income tax and the limited scope of withholding certainly contributes to the problem. The very definition of withholding in Title 26 is based on the definitions of "employer" and "employee" in the statutes in sub chapter 3=and they define the employer as federally connected entities only. Libertarians like B Doherty have flatly declared that the law doesn't matter, and simply appeal to authority, without legal argument. But up to WWll the only withholding agents were federal paymasters. Milton Friedman famously worked on "universal withholding" but the truth is while withholding has indeed become ingrained in the private sector, the law defining it was never changed.

  • Juice||

    libertarian/conservative establishment

    There's no such thing.

  • Sigivald||

    Federal definitions of "employee" for tax purposes have nothing to do with this ruling, though, since it's not based on Federal laws.

    It's all CA precedent and hinges on the lack of a definition in CA law.

    (Re. the Federal law, you confuse ""employee" includes an officer ,employee, or ... of the United States" with ""employee" means ONLY [those]".

    26 USC 3401(c) is explicitly including Federal employees as being covered, not defining it as covering ONLY them; "includes" is not the same as "consists of" or "defined as". It's an explicit inclusion of them, not a limitation of scope to them.

    Section (d), defining Employer, does not limit "employer" to Federally-connected only; it does not have any of the "United States, a State", etc. language. It's "person for whom [someone performs a service]", with control of their wages.

    Go look at it again and rethink your thesis.)

  • Scarecrow Repair & Chippering||

    But people are naive and ignorant and stupid and have no agency, so these do-gooders must appoint themselves nannies to help the downtrodden, especially those who are so trodden down that they don't realize they've been trodden down.

    Bet they do now!

  • Let freedom ring||

    It is true that under the Irwin Schiff inspired Tax Honesty tactics of "don't file, don't pay, make them prove their jurisdiction" federal judges caved to IRS pressure (Chevron Doctrine) and gave the benefit of doubt to the IRS, often at the expense of due process.
    However, in 2003 libertarian Pete Hendrickson realized it was the tactics that were wrong, not the basic idea that the Income Tax was wrongly applied-as an unapportioned direct tax , instead of the excise tax it actually is.
    The reason the withholding laws are so narrowly written is not Congressional error (Congress must have meant everyone) but because the income tax is a classical liberal public office duty, a tax on the exploitation of a federal privilege for profit. Because the tax is based on voluntary compliance and individual self assessment, it is up to individuals to determine if they had taxable income or not, and report such on their tax returns. The IRS, after some resistance, has been honoring these "educated" returns for over 15 years now, and thousands of Americans are receiving full refunds of state and federal withholding, including payroll taxes. Www.losthorizons.com

  • Rossami||

    Again, irrelevant. This was a State court ruling based on a State law.

  • perlchpr||

    Spammer. He's one of those "The 16th Amendment doesn't really apply to YOU!" sorts.

  • See.More||

    Because the tax is based on voluntary compliance...

    Bwahahahahahahahahahahaa!

  • Uncle Jay||

    "A state supreme court ruling jeopardizes the very idea of independent contractors in several trades.

    Well, yeah.
    But then, what would do expect from the People's Republic of Kalifornia?
    Freedom to run your own business as YOU see fit?

  • Scarecrow Repair & Chippering||

    Or freedom of workers to hire out as they see fit? A meeting of the minds between businesses and workers? Voluntary contracts?

    Heavens no!

  • Sigivald||

    Labor unions will care about tattoo artists and hairdressers once they unionize, and not a second before.

    (Possibly not after, but they might pretend.)

  • ||

    And they will in no ways consider unionizing as long as they are allowed to remain independent contractors rather than employees.

    Wait . . .

  • Gracchus||

    And they will in no ways consider unionizing as long as they are allowed to remain independent contractors rather than employees.

    Interestingly enough, independent contractors aren't allowed to unionize unless they're considered employees.

  • Longtobefree||

    On the plus side, many really bad programmers will lose their jobs too.

  • mgoodfel||

    A lot of good ones too. Not everyone wants to take a pay cut and work for a single employer. For what? Job security? No such thing.

  • FMurderSlaybraham||

    Interested in how this ruling applies to other independent businesses that operate within a larger independent business, like shopping centers, food courts, etc. Much like hair stylists, these businesses lease out a space and enjoy some shared services like trash, water, power, etc. Does this mean that Westfield now owns Hot Dog on a Stick, or that the woman selling handmade jewelry in a stall in my local public market is now an employee of the market?

  • ||

    This is going to play hell with construction consulting, as well.

  • Unicorn Abattoir||

    It depends on which politician they bribed/pissed off.

  • BigT||

    Think of the hookers!

  • Diane Reynolds (Paul.)||

    Imagine getting a tattoo from the SEIU.

  • Shirley Knott||

    A numeric code, tattooed on the inner arm.
    And probably a micro-chip given 'modern times.' But the tattoo thing is a give.

  • Shirley Knott||

    *given

  • mjs_28s||

    Remember this over regulation when someone tells you that we live in a free country.

    Ok, so then why do you need permission from the government to do so much that really serves no purpose other than to continue crony capitalism.

  • ||

    This is your straw? What are you, 12? Shit, we have 120 years of over-regulation (I'm putting it at Teddy's feet).

  • Unicorn Abattoir||

    The most important—and potentially damaging—is that an independent contractor's work must "fall outside the usual course" of what the business does. Put differently, the contractor cannot be involved in the same work as the company.

    So if you run a construction company, and you subcontract part of a job to another company, are they contractors or employees?

  • perlchpr||

    So if you run a construction company, and you subcontract part of a job to another company, are they contractors or employees?

    Yes!

  • Ron||

    that is a real issue since quite often if a small business gets to busy they will contract out one or tww jobs since they don't have enough work to hire full time. No one likes hiring people just so they can fire them after a job is done. corporations do that all the time but small bussiness owners can't get that type of reputation or else they can't get any help.

  • Unicorn Abattoir||

    "Conspicuously absent from the test is worker preference."

    We are NOT about to let workers get in the way of our worker's paradise!!!

    /cali prog

  • Mickey Rat||

    Silly. Worker's rights are for workers as a collective. Individual workers must bow to the collective, their preferences be damned.

  • Echospinner||

    Right on page two.

    "Depriving federal and state governments of billions in tax revenue..."

    Heh.

  • snowhawk||

    Laughable!! Years ago I owned a Beauty Shop. As was custom with most shops I leased space to the cosmetologists working within the shop. The lessees were responsible for keeping their own records and paying their own taxes. They brought their own tools, products, and clientele. Evan at that Commiefornias State, County, and City regulations and licensing kept it from being worthwhile. I have sympathy for all those trying to build a small business in this commie RAT infested shit hole.

  • perlchpr||

    Harder to do with a hairdresser, I'd think, but tattoo booths tend to be at least somewhat private. Maybe tattoo parlors could seriously subdivide the shop interiors, putting up full height walls and locking doors, and then very clearly formalizing that they're only a bunch of tattoo artists that happen to be renting shops right next to each other for advertising purposes.

    I mean, no, they probably won't get away with that either, but it seems like a possible line of attack.

  • vek||

    Might as well try!

  • Gaear Grimsrud||

    As In understand it, hair stylists and tatoo artists rent space in a place that will enhance their business, just like any other business that might lease real estate to operate in. They develop a clientele through their service and skills and if they're good enough they can be successful, just like any other business. If they move to a different parlor a majority of their clientele will follow them, just like any other successful business. By any logical measure they are self employed. They endure the risk of failure and the satisfaction of success. If they don't work, they don't get paid. They must constantly work to maintain a satisfied customer base. They pay for their own insurance and the full 15.3% "self employment" tax. If business is slow they can't draw unemployment benefits in fact they'll continue to pay their fixed costs probably at a loss. To call these people employees is total fucking horseshit
    I've been self employed for most of the last 35 years not because I'm smart or even particularly ambitious. I do it because I'm wired up that way. It's called life, liberty and the pursuit of happiness. Live and let live motherfuckers.

  • perlchpr||

    Live and let live motherfuckers.

    No no. These are politicians. Never happen.

  • See.More||

    As I understand it, if someone is renting space then they are not be paid by the Space/Business owner, but are paying for space, Therefore, they are not independent contractors to the Space/Business.

  • UnrepentantCurmudgeon||

    The bottom line here, at least for professions like barbers and cosmetologists (no small number of people, at least in California and within the black and Hispanic communities), is that they are not going to start working for any companies, companies would not want to take on all those new hires anyway, and they will be prohibited from working on their own. So with a single stroke our uber liberal state supreme court (the lower case is intentional) has destroyed an arguably small but inarguably important piece of our state economy. Will the legislature deign to take this on and make the law about independent contractors clear and unassailable? Well, the unions stand behind the supreme court decision, so you do the math.

  • Sevo||

    "...So with a single stroke our uber liberal state supreme court (the lower case is intentional) has destroyed an arguably small but inarguably important piece of our state economy...."

    Nope, it is now just 'dark' and largely invisible to the bureaucracy.
    Most all good histories of the end of the USSR make it clear that Gorby (like Kim now) didn't dare shut down the black-markets; they were what allowed his thuggish state to exist for the last several years that it did. Moonbeam is too stupid to know that, but the operators certainly do.
    Example: Among Marin rock-and-rollers, mid '70s, you didn't go to a store to buy a gun. Even then, they wanted more information than folks were comfortable handing out.
    Instead, somebody knew somebody who dropped by in the late afternoon with a padded valise of display items and some stock. He smoked your dope. Buy it then, or get delivery a week or so later, hand-delivered, cash.
    I'm long out of that loop, but I doubt it has disappeared.

  • perlchpr||

    What the hell do you need a gun for in Marin?

    Well, maybe if you're going to Oakland, I guess.

  • Ron||

    I wonder which barber/hair cut chain is behind this legislation, they are the only one who could be happy with a law of this type

  • snowhawk||

    Laughable!! Years ago I owned a Beauty Shop. As was custom with most shops I leased space to the cosmetologists working within the shop. The lessees were responsible for keeping their own records and paying their own taxes. They brought their own tools, products, and clientele. Evan at that Commiefornias State, County, and City regulations and licensing kept it from being worthwhile. I have sympathy for all those trying to build a small business in this commie RAT infested shit hole.

  • BigT||

    Why not just put a sign in front of the tattoo parlor that reads: "Phrenologists"

  • Sevo||

    "Why not just put a sign in front of the tattoo parlor that reads: "Phrenologists""

    In CA, you couldn't be shut down; you're a minority!

  • BigT||

    Reason 7,486 to gtfo of CA

  • Two Buck Chuck||

    The rub is that I'd bet half of what I have that the vast majority of hairstylists and inkers are Statist apologists. Want more gubmint, kids? Here's more gubmint! Enjoy! And when you escape to Arizona, please remember why and leave your dumb voting habits at the state line. Cripes. :D

  • Sevo||

    Two Buck Chuck|9.10.18 @ 9:07PM|#
    "The rub is that I'd bet half of what I have that the vast majority of hairstylists and inkers are Statist apologists."
    Absolutely.
    I live in SF.
    The folks converting their rental units back to single family? They support rent control, for other people, because they don't want to apologize when someone asks.
    The contact for one of our suppliers today mentioned he's 'Jewish and liberal', but wants to load the homeless on buses for Nevada.
    Over the weekend, we had 'thousands' of people signaling their concern for 'the environment', as if they had any idea what that meant or how to 'save' it. And they flew in here from many countries.
    Capitalism is so successful that it provides the means for useful idiots to attempt to undermine it.
    Yes, turd, Tony, Hihn, trueman the asshole rev, and others. That means idiots like you.

  • perlchpr||

    The contact for one of our suppliers today mentioned he's 'Jewish and liberal', but wants to load the homeless on buses for Nevada.

    I have to admit that this doesn't seem epically horrible to me.

    If one is inclined towards the position that "housing is a human right", it doesn't necessarily follow that "housing in San Francisco is a human right".

    But housing in Detroit is cheap. SF could buy houses in Detroit and put their homeless people in them. Of course, then you have the problem of convincing them to stay...

  • Carter Mitchell||

    Unions need to be reclassified as ongoing corrupt criminal enterprises, with their leaders subject to lengthy prison sentences.

  • Carter Mitchell||

    Oh, forgot to add courts to that list. Most judges are accessories before and after the fact to most of the state's criminal activity.

  • jkj||

    Wondering if this is going to apply to physicians, dentist, and other professionals who have a similar arrangement. I know that many physicians operate as contractors to the hospital where they essentially rent space to see patients and have access to other facilities.

  • Kristian H.||

    Hmm. So what about:
    - Freelance reporters?
    - Writers?
    - Actors?
    - Comedians (like at comedy clubs)?
    - Professional sports?

    Does this mean a full scale return to the studio system?

  • TxJack 112||

    In other words, yet again the courts and the government have step in to determine the limits of people's freedom by making decisions about how is allowed to hire contractors and who is allowed to be contractors. The simple truth is contractors are paid in a way that makes it difficult to accurately track their income. The government is forced to accept that the amount of taxes paid is correct based on nothing more than the honest of the person filing. By forcing everyone to be hourly employees, the government will have a much better way to verify taxable income and that is all that California actually cares about in the end. Socialists need money to pay for all the services they promise so they always look for ways to get the most from those they can tax. Labor unions support this move because they survive by forcing corporations into contracts that enrich them, not their members. You cannot force independent contractors to unionize which is the only way most workers will agree to unionize nowadays since big unions are nothing more than political machines.

  • Ron||

    I wonder how this new rule will affect hospitals. I don't know about all of them but our local hospital contracts out some of the doctors and they bill separately from the hospital which was just a method of making it look like the hospital was cheaper but in reality a method of getting around insurance payments and making the client pay out of pocket. its a crooked scam

  • vek||

    This will have WIDE implications in the tech industry. A HUGE percentage of their workers are actually contract workers. If they can't be involved in regular course of business activities, they're fucked. I know plenty of people who work contracts up in Seattle. Most of them like it. One of my friends has done exclusively this for 10+ years. Others do it for a time, but also like to have real employee relationship jobs too. But they weigh and measure and make the choice based on their wants/needs. They both have merit.

    This tosses that choice out the window. I would not be surprised to see the tech giants fighting that bit of the law at least.

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