New California law threatens to put state's freelancers out of work

Cal Jeffrey

Posts: 3,125   +863
Staff member

The gig economy has solidified itself as a part of the US gross domestic product. As more and more workers look to companies like Uber and Lyft for part-time or even full-time income, the industry is going to continue to grow.

In a supposed effort to protect these workers, California enacted Assembly Bill 5 (AB5). The new law took effect on January 1 and puts restrictions on how businesses classify independent contractors or freelance workers. Most notably, AB5 sets a very low bar in some industries for what can be considered full-time work.

It was intended to help gig-workers obtain benefits, like medical insurance and retirement plans from their employers, by forcing companies to hire them full-time. However, AB5 is having the opposite effect as employers ditch their freelancers in favor of fewer full-time workers.

USA Today notes, Uber and others are fighting against the AB5 by trying to get it amended through a ballot initiative. While ride-sharing drivers seem to be the most obviously affected, the law began impacting freelance writers before it was adopted.

"Anyone who writes a weekly column, for instance, is likely out of a job if their publisher cannot hire them as an employee. The bill also penalizes freelancers who create content in non-traditional formats such as blog posts, transcriptions, and listicles, the latter of which are often requested in bulk."

Ironically, Vox Media touted the law’s passing as a “victory” for California gig workers but notes that in 2020 it will be eliminating most of its California freelancers who contribute to its SB Nation sports sites.

“In the early weeks and months of 2020, we will end our contracts with most contractors at California brands,” SB Nation Executive Director John Ness said in a December blog post. “This shift is part of a business and staffing strategy that we have been exploring over the past two years, but one that is also necessary in light of California’s new independent contractor law, which goes into effect January 1, 2020.”

The problem is that the new law limits freelancers to 35 contributions per year to a single publication. Anything above that limit and the company has to consider hiring the freelancer to a full-time position. To put that in perspective, writers who contribute only three articles a month to a website have to be offered full-time work.

“The 35-piece per publication limit comes out to less than one piece per week,” Reason notes. “Anyone who writes a weekly column, for instance, is likely out of a job if their publisher cannot hire them as an employee.”

So instead of transitioning gig workers into full-time positions, AB5 is already causing publishers both within and outside of the state to avoid hiring contributors from California.

Image credit: Cory Seamer via Shutterstock

Permalink to story.

 

VitalyT

Posts: 5,837   +5,897
Being an independent contractor offers many benefits that traditional 9-to-5 jobs do not, including flexible hours, the ability to work from home, and not having to deal with office politics

This is all BS, which I'm telling you as a software contractor for 10 years now, with many contracts behind me. Those things happen only if you contract remotely, from home, but for most contractors who have to work in the office this is not true.
 

PEnnn

Posts: 635   +617
And the basket case that is California continues on its wild ride. Where it stops, Venezuela knows.

Keep on dreaming. Something the righties always forget:

California has the FIFTH LARGEST economy in the WORLD. As in more than dozen of countries PLUS all the red states in the US combined!!
Its economy is even larger than the UK's!
 

psycros

Posts: 3,559   +4,336
Keep on dreaming. Something the righties always forget:

California has the FIFTH LARGEST economy in the WORLD. As in more than dozen of countries PLUS all the red states in the US combined!!
Its economy is even larger than the UK's!

Its also the most in debt, has higher crime rates than anywhere except DC and is a textbook case on mismanagement. Oh, and its NOT a bigger economy than all the red states combined because Texas exists. America is the largest economy in the world and its massively in debt, to the point that only its military might ensures any real value for the US dollar. So what's your point, exactly? Oh, and I don't know who "righty" is so I'll assumed its someone who's always right.
 

Hexic

Posts: 1,030   +1,514
TechSpot Elite
Its also the most in debt, has higher crime rates than anywhere except DC and is a textbook case on mismanagement. Oh, and its NOT a bigger economy than all the red states combined because Texas exists. America is the largest economy in the world and its massively in debt, to the point that only its military might ensures any real value for the US dollar. So what's your point, exactly? Oh, and I don't know who "righty" is so I'll assumed its someone who's always right.

You beat me to pointing out the fallacies of that prior statement. CA stumbled into their fertile lands not by any intelligent policy-making, that's for sure.
 

Uncle Al

Posts: 8,167   +6,924
Being a contractor these days isn't all it's cracked up to be. Since the Trump tax plan went into effect, deductions like Per Diem and other sundry costs can no longer be written off and companies are very reluctant to pay the added money for retirements, medical insurance, etc. as they once did. There will certainly be fall out in the beginning but in the long run it does look like it will benefit those in the field ....
 

Theinsanegamer

Posts: 2,654   +4,128
The gig economy was a band aid over a festering wound: the lower and lower middle class had nowhere to go after NAFTA obliterated basic factory jobs, the rise of the internet putting intense pressure on retail jobs, and the loss of high hour "part time" jobs after obamacare went into effect, and made it mandatory to give employees that worked over 30 hours a week/130 a month benefits (in some situations).

these factors have had many wide reaching effects, the most notable is that those not in trade skills or high demand college jobs are forced to work multiple jobs to get by. In the past, these people would have been working 40-50 hours a week as a part time" employee, not the greatest situation, but providing income to get by. Today, such positions dont allow you to work more then 29 hours a week to avoid having to pay benefits, but still require those employees to be available to work all shifts, making it impossible to hold two jobs at once. As such, these people are forced to use gig economy jobs, which are incredibly unstable, have high associated costs, and face intense competition for services, just to make ends meet.

These gig jobs take advantage of people in poor economic situations. Sure, you can make decent money from uber/lyft/driving jobs, but you are going to pay so much in higher maintenance costs, higher and more frequent repair costs, higher insurance costs, and more frequent replacement of said vehicle that the profits make almost no sense in the long run. It's all based on short term profit and thinking, which helps to trap these people into a cycle of poverty while the founders get wildly rich and somehow these corporations STILL bleed billions.

Commiefornia, however, is going about this just the worst way possible. Much like obamacare, this new law will have nasty aftershocks that are arguably worse then the problem this law "fixes".
 

kapital98

Posts: 368   +320
It's hard to understate how little research (or relevant citations) the author did prior to publishing this. It's an opinion piece, with no opinion disclaimer, without any evidence to back it up.

There are inherent trade offs of labor legislation. A neoclassical analysis would look at distribution of income between the owners and labor. Generally this results in a small deadweightloss but more money going to labor. A more modern analysis would look at California's impact on labor market's in general & the impact of capital flight (something the Vox article did a great job on). In some instances, like a monopsony, it actually helps everyone to have more robust labor laws.

Either way, it would be a theoretical look at what could happen and an empirical look at what has already happened in past examples.

This article doesn't do any of that. It's a couple of tired rhetorical arguments copped from a hazy memory of an ECON101 graph. As the author is likely aware, SBNation does not have editorial control over Vox (Vox and SBNation are both owned by Vox Media but are otherwise separate).

Tl;Dr version: There are benefits to labor from this legislation. Some part-time workers will lose work but, overall, more money will go to workers. It is not at all surprising companies that benefit from lax labor laws are unhappy with the result.
 

Danny101

Posts: 1,827   +790
California: The workers are freeing themselves from the system! Quick! We must do something!
 

sreams

Posts: 179   +294
Gig economy is a disgrace, it’s a way for billionaires to destroy workers rights, they get no benefits of a real employee and sh!t wages. The Returdicans love the gig economy.

As a gigging musician, I can tell you that you are dead wrong. You need to walk in some body else's shoes before telling them how much you know about their supposed predicament and trying to save them.
 

sreams

Posts: 179   +294
It's hard to understate how little research (or relevant citations) the author did prior to publishing this. It's an opinion piece, with no opinion disclaimer, without any evidence to back it up.

There are inherent trade offs of labor legislation. A neoclassical analysis would look at distribution of income between the owners and labor. Generally this results in a small deadweightloss but more money going to labor. A more modern analysis would look at California's impact on labor market's in general & the impact of capital flight (something the Vox article did a great job on). In some instances, like a monopsony, it actually helps everyone to have more robust labor laws.

Either way, it would be a theoretical look at what could happen and an empirical look at what has already happened in past examples.

This article doesn't do any of that. It's a couple of tired rhetorical arguments copped from a hazy memory of an ECON101 graph. As the author is likely aware, SBNation does not have editorial control over Vox (Vox and SBNation are both owned by Vox Media but are otherwise separate).

Tl;Dr version: There are benefits to labor from this legislation. Some part-time workers will lose work but, overall, more money will go to workers. It is not at all surprising companies that benefit from lax labor laws are unhappy with the result.

Don't count your chickens before they hatch. You call out this article for making assumptions... and then you go on to assume what the end result will be of this legislation.
 

noel24

Posts: 746   +915
Weren't Vox media having financial problems for some time now due to SJW writers overunning their outlets and inserting political agenda where it did not beleong, turning off readers? I remember it made them loose advertisers, hence it was hashtagged Vox AdPocolypse.
I wouldn't link sackings with new law, unless They wanna cover up their incompetence with Their choice of writers.
 

kapital98

Posts: 368   +320
Weren't Vox media having financial problems for some time now due to SJW writers overunning their outlets and inserting political agenda where it did not beleong, turning off readers? I remember it made them loose advertisers, hence it was hashtagged Vox AdPocolypse.
I wouldn't link sackings with new law, unless They wanna cover up their incompetence with Their choice of writers.

Vox Media is highly diversified. Vox (the news site) has plenty of SJW's but I haven't heard of any problems with advertising boycotts. Same goes for their more old school acquisitions.

SBNation on the other hand, they don't have many SJW's but they have a ton of part-time staffers due to having ~300 individual sports sites. Think of it like having (more or less, depending on the site) 300 techspots. The sites I go to (Badlefthook, BloodyElbow, etc) usually have a couple full time staffers and a handful of enthusiasts who are either free or paid very little but love the sport.

I wouldn't expect many of the people on BloodyElbow to visit Vox on a regular basis. The opposite also being true.

For the most part, Vox Media is facing the same pressures most media conglomerates are facing --- how to make money in an incredibly competitive industry and where most users use Adblock. For instance, Vox uses Youtube, premium paid services, and Netflix documentaries to increase revenue. The SBNation sites I go to all use a combination of podcasts, youtube, etc.
 

PEnnn

Posts: 635   +617
Oh, and its NOT a bigger economy than all the red states combined because Texas exists.

Wrong again. Even including Texas, California's economy puts all red states AND Texas to shame.

I guess Googling / doing research is not your strong point. Try that next time before posting incoherently.
 

jpuroila

Posts: 372   +225
As a gigging musician, I can tell you that you are dead wrong. You need to walk in some body else's shoes before telling them how much you know about their supposed predicament and trying to save them.
I'm fairly certain that professions like gig musician aren't what people are talking about when they refer to gig economy. They're talking about professions that would ordinarily be full-time jobs, such as reporters and taxi drivers.
 
D

DelJo63

I have several friends in independent, non-tech jobs and when then consolidate for back office support, Cal DOE intervenes and they become subject to Workman's Comp et al. They should have been classified as 1099 Independent Contractors, but the State want's its cut.

No wonder there are more people moving out of CA vs moving in.
 

sreams

Posts: 179   +294
I'm fairly certain that professions like gig musician aren't what people are talking about when they refer to gig economy. They're talking about professions that would ordinarily be full-time jobs, such as reporters and taxi drivers.

The law doesn't make such distinctions. That said... I know more that one Uber/Lyft driver (and have ridden with several) that appreciate the flexibility offered them as independent contractors. It's a way to supplement income, and that is severely threatened by this new law.
 

Gus Fring

Posts: 66   +19
Keep on dreaming. Something the righties always forget:

California has the FIFTH LARGEST economy in the WORLD. As in more than dozen of countries PLUS all the red states in the US combined!!
Its economy is even larger than the UK's!
Gigity Gigity .. NO! Calif is way behind the UK .. where's its army, Navy AIrforce ?
 
Keep on dreaming. Something the righties always forget:

California has the FIFTH LARGEST economy in the WORLD. As in more than dozen of countries PLUS all the red states in the US combined!!
Its economy is even larger than the UK's!
this is ANOTHER good reason to flee CA. have you seen CA's exodus rate? California lost 691,000 smart people in 2018 (sac. bee) ... and gained 8.6 million new rats ... so ... awesome! oh --- and where do you get your water?
 

sreams

Posts: 179   +294
I'm fairly certain that professions like gig musician aren't what people are talking about when they refer to gig economy. They're talking about professions that would ordinarily be full-time jobs, such as reporters and taxi drivers.

As others have said, it doesn't matter one bit what "people are talking about". What the law says is all that matters.