California’s attack on the gig economy has created a mess.
This month, the Golden State implemented a law – AB 5 – altering the definition of independent contractors.
State lawmakers intended to make drivers who are independent contractors like Uber and Lyft become employees.
But the law’s effects go beyond ridesharing, effecting workers like truck drivers and freelance writers.
For instance, 350,000 owner-operators own their own trucks in the U.S., giving them flexibility over when and where they work.
But for those in California, AB 5 could dramatically change how they do their jobs. To comply with the law, some trucking companies have given owner-operators the option of moving out of the state or selling their rigs and becoming company employees.
Owner-operators aren’t happy being pushed into a corner.
“We love being independent contractors,” said Ernesto Lopez Jr., an owner-operator last November. “Companies need the trucks; a job needs to get done. But they’re telling us that we can’t do the work we do how we’ve done it forever.”
A federal judge temporarily blocked AB 5 as applied to truckers. We’ll wait and see how this pans out.
Another group affected by AB 5 are freelance writers. Under the law, freelance writers can continue to be independent contractors but only if they write 35 pieces a year for a single publication.
“It will effectively make freelance writing and other creative work illegal,” writes Bonnie Kristian, a freelance writer for The Week.
Kristian explained, if she worked in California, to maintain her income, she would have to find five new outlets for her writing, “which would be a monumental task, particularly with all the other freelancers trying to do the exact same thing at the exact same time.”
Freelancers like her want the flexibility freelancing brings. Instead, the law closes a door to economic opportunity to people like her.
Last month, hundreds of freelance sports writers bore the brunt of AB 5 when the blog network, SB Nation announced it had to end contracts with over 200 writers because of the law.
AB 5 is a classic example of the Law of Unintended Consequences. What’s worse, other states are considering following California’s lead.
As U.S. Chamber CEO Tom Donohue noted in his State of American Business address, such state laws impeding innovation have “potentially huge effects on our national economy.”
You can be sure the U.S. Chamber will work with state and local partners to reform or defeat these types of policies, allowing workers the freedom to be independent contractors.
