I run a small business. It happens to be an online local news website with a growing audience, but it’s a small business nonetheless.
It’s done very well over the past five years. It was recognized as Small Business of the Year in the 39th state Senate district in 2016. And it has been named the best news site in San Diego for three years in a row by the San Diego Press Club. But it’s still a small business.
Times of San Diego isn’t Uber, or Lyft or DoorDash. But like those multi-billion-dollar companies, it will be severely impacted by Assembly Bill 5, the controversial legislation that will make most independent contractors become traditional shift employees.
My website has five contributing editors, all independent contractors, working from six to 20 hours a week. They work from home, using their own equipment, without set hours. They all have other journalism gigs.
All five will have to become shift employees under Assembly Bill 5. I’ve done the math. My costs will go up around 10% thanks to unemployment insurance and the complexity of payroll and tax withholding. Their pay won’t change, though taxes will be withheld. But the business’ small profit will be wiped out.
My situation isn’t unique. This same scenario will be faced by a small web developer who uses contract programmers. Or a plumber who is running behind schedule and needs an extra hand. Or a jazz musician who needs a drummer for a gig. Or an independent film producer who needs actors. Or a tech startup in downtown San Diego that needs additional engineers to meet a deadline.
Some 40 or so occupations have large enough constituencies to have been granted exceptions. They include doctors, insurance agents, real estate agents, architects, travel agents, stockbrokers, commercial fishermen, barbers — even repo men. Online journalists unfortunately don’t have the lobbying heft. And in any case, the exceptions just scratch the surface of the problem, with the U.S. Bureau of Labor Statistics defining nearly 1,000 current occupations.
I’ve spoken to Assemblywoman Lorena Gonzalez, who authored the bill, and Sen. Toni Atkins, who represents my district. They were gracious and gave me time to express my concerns. They’re under the gun because of 20th century labor laws upheld by the state Supreme Court last year in the “Dynamex” decision.
There are laudable goals behind Assembly Bill 5. Large companies should not misclassify jobs to cut costs. Traditional, full-time employment with benefits and unemployment insurance is important for our society, and large, successful companies are in a position to provide it.
Lyft has said that as many as 300,000 of its drivers could lose their jobs. That may well be an exaggeration, but I know many small businesses that are considering cutting staff or hours in order to comply with Assembly Bill 5. A few hours here, a part-time position there — it will add up.
Instead of just signing this bill and looking the other way, Gov. Gavin Newsom should take a step back. We need legislation that not only protects workers in big companies, but also small businesses and people who want the flexibility of the gig economy. Otherwise, California’s small businesses will be collateral damage.
Chris Jennewein is editor and publisher of Times of San Diego, which is organized as a small limited liability company under California law.