Our View | The Devil Is in the Details of Exemptions Under AB 5

Our View

By The Signal Editorial Board

Sometime in 2020, you might call for an Uber or Lyft ride, and experience sticker shock unlike anything you’ve seen under the so-called “surge” pricing that occurs when the ride-share services get extremely busy in one particular area.

Or, worse, there may not be an Uber or a Lyft driver available at all.

But that’s going to be just the tip of the iceberg in California under Assembly Bill 5, which passed through the Legislature this past week and, as of this writing on Thursday, appeared all but certain to be signed into law by Gov. Gavin Newsom.

The purpose of AB 5 is to change the state’s laws about who’s considered an independent contractor, and who’s considered an employee. However, the legislation is flawed and includes numerous exemptions that exclude certain professions from its requirements — in other words, it doesn’t apply equally to all who were previously  considered independent contractors.

It’s inherently unfair, by design. 

Notably, many of the “carve-outs” were higher-paying professions that aren’t being targeted for organization by labor unions.

Prior to AB 5,  rideshare drivers like those who drive for Uber and Lyft have been among those considered independent contractors: They don’t receive employee benefit packages, they don’t enjoy the wage security of an employee, and they don’t get paid vacations or sick time.

Likewise with many other professions, from freelance journalists to marketing professionals to architects, engineers and many others who consider themselves a consultant or a freelancer. 

In other words, the entire “gig” economy — all of those who have chosen, for whatever reason, to “be their own boss,” set their own schedules, and work generally free of the scheduling and supervision entanglements of being an employee.

Those things appeal to a lot of people. You might rely fully on a “gig” job to put food on the table, or you might have a “day job” as an employee and drive for Uber on the weekends to bring in some extra dough.

AB 5, pushed forth by labor unions, aims to classify many of those workers as employees, essentially eliminating that freedom for businesses and freelancers alike.

Admittedly, some sort of reform is needed to better protect gig workers from being taken advantage of by predatory companies. However, AB 5 isn’t the answer.

And, the way AB 5 has evolved in the Legislature is a testament not only to that fact, but also to the real motivation of the Democrats in Sacramento who have pushed AB 5 as a workers’ rights bill.

You see, advocates of AB 5 estimate that the state “loses” $7 billion a year in tax revenue to independent contractors who aren’t classified as employees.

There it is.

AB 5 isn’t as much about workers’ rights as it is about the dollars —the dollars that aren’t flowing in to Sacramento. In essence, it’s a way to create new taxes… without having to admit you’re creating new taxes.

For further proof, one need look no further than the “exceptions” that have found their way woven into AB 5.

In fact, two of those exceptions would actually benefit our industry, as a news publication: Among the dozens of exemptions and exceptions written into the fine print of AB 5 are those that exclude freelance writers, journalists and photographers from being considered employees, so long as they submit no more than 35 assignments to a single outlet in one year. 

Would that benefit The Mighty Signal? Sure. We occasionally use freelancers to shore up the coverage when our full-time staff can only be in so many places at one time. 

But that doesn’t mean AB 5 is a fair solution for everyone. Other exemptions were also added for a variety of professions, ranging from accountants to commercial fishermen to marketing professionals.

In other words, the Legislature is saying, “OK, we’ll get these professions — and their advocates — off our back so we can go after what we’re really after: Uber and Lyft.”

For their part, Uber and Lyft — which aren’t profitable as it is — have pledged to spend $60 million on a 2020 ballot measure to overturn AB 5.

Can the employer vs. independent contractor laws be improved to better ensure fairness not only for Uber and Lyft drivers, but also for the many other professions whose practitioners enjoy the relative freedom of setting their own schedules and working when they want, where they want? 

Sure. However, any such solution should be applied equally among all industries, without all of the negotiated deals for specific business sectors that have been tacked on to AB 5.

But AB 5 isn’t really about the rights of independent contractors. It’s about additional tax dollars that the Legislature wants to bring into Sacramento.

Seven billion of them. 

Related To This Story

Latest NEWS