Last year the California Supreme Court ruled that labor laws dating from the age of vacuum tubes and rotary telephones govern the work of 2 million independent contractors. The Legislature’s reaction has been a “crazy quilt” of exemptions that do little to solve the fundamental problem.
In a case involving the Dynamex trucking company, the court ruled that drivers had to be classified as employees, not independent contractors, and left it to the Legislature to sort out the implications. Assemblymember Lorena Gonzalez of San Diego introduced Assembly Bill 5 to simply enshrine that decision into law.
All California contract workers, from Uber drivers to software developers to carpenters to hair stylists, would have to become shift workers, punching a time clock. No more flexible hours, surfing in the morning, or working from home. Life would become regimented.
That’s a worst-case scenario, of course, but becoming employees would be a big adjustment for those 2 million Californians and for the businesses that would suddenly face increased expense, complex paperwork and potentially the threat of lawsuits.
Unions would be happy because employees are easier to organize than contractors. Contingency-fee lawyers would also be happy, thanks to the Private Attorneys General Act, which makes it easy to sue a business over a minor infraction of the notoriously complex state labor code.
So immediately the lobbying began, and as of July 28, these occupations have been exempted:
- Repo men
- Insurance brokers
- Physicians and surgeons
- Direct-sales workers (think Avon and Amway)
- Real estate agents
- Hairstylists, barbers, electrologists, and hair braiders
- Private investigators
- Freelance writers (but only up to 25 articles per publication per year)
- Fine artists
This crazy quilt of specific occupations is enumerated in the bill in exactly this order. The U.S. Bureau of Labor Statistics defines 867 different occupations in 2019. Presumably the Legislature is not going to examine every one of those for applicability.
But more importantly, how is the work done by repo men and podiatrists fundamentally different than that done by software developers and Lyft drivers? Why can’t workers decide whether to remain independent or become employees?
The solution is to fundamentally change California’s labor laws and clearly define independent contracting. For example, independent contracting could be defined as work under a certain number of hours per week, or total compensation per year, with the worker using his or her own equipment and subject to minimal direction. There could also be exceptions for small businesses and startups, perhaps with annual revenue and workforce size thresholds.
Large companies have the resources to set up human resources departments and properly administer the complex state labor code. Small businesses and startups do not. There are private companies that provide this service, but it’s a significant added expense, and the threat of lawsuits remains. Furthermore, making everyone an employee raises a special issue in immigrant California because citizenship verification is required.
For many small businesses and startups, the response to Assembly Bill 5 will not be to turn contractors into employees but to dismiss them. Owners will simply work longer hours, take fewer jobs, or even quietly pay workers in cash. And California’s undocumented will find themselves pushed further into the shadows.
Proponents of Assembly Bill 5 argue that it will protect workers and support the state unemployment insurance program. But at a time of historically low unemployment, an independent contractor has plenty of options. And independent contractors aren’t eligible for unemployment insurance; they assume the risk by being their own boss.
California’s 2 million contract workers, and thousands of small and startup businesses, deserve to retain their independence and flexibility — not have industrial-age rigidity forced upon them.
Chris Jennewein is editor & publisher of Times of San Diego, a five-year-old online news site that relies on journalists who work as independent contractors.