California’s War On Gig Economy Jobs Goes National

Assembly Bill 5, an unmistakable gift to labor unions from the California State Legislature, which saw the surge of independent contract workers as a source of easy money if they could be organized, set off more outrage than any California law in memory. Thousands lost their jobs because AB5 essentially outlawed gig work. While the losses are largely confined to California, the war on jobs isn’t. Lawmakers elsewhere are also coming for freelance workers.

Legislatures in at least four states – New York, New Jersey, Illinois, and Washington – have introduced laws similar to AB5. Massachusetts has had a comparable law on the books since 2004, but “it has not been fully enforced,” according to the American Society of Journalists and Authors. However, it appears pressure is building for the state to crack down on worker choice.

Meanwhile, “union guy” Joe Biden pledged during the 2020 campaign that if elected, he would work with Congress to establish a federal standard modeled on the California Supreme Court’s “ABC test” for all labor, employment, and tax laws. This was followed by House and Senate Democrats introducing the PRO (Protecting the Right to Organize) Act.

It’s a scattergun shot of labor law changes on behalf of unions – which saw the surge of independent contract workers as a source of easy money if they could be organized – that includes a provision that mirrors AB5 through its intention to prevent “employers from misclassifying their employees.” Included in the bill is the ABC test that is the core of AB5, which codified the California Supreme Court Court’s 2018 Dynamex decision.

In that case, a suit filed by drivers against a courier service, the court ruled that to be classified as an independent contractor, a worker must (A) be free from the control and direction of the business during performance of the work; (B) perform work outside the usual course of the hiring entity’s business; and (C) be customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. It’s a nearly impossible bar to reach.

The PRO Act has been introduced before, but never passed. With Democrats now holding the majority in both chambers, and occupying the White House, the chance it will become law has increased sharply.

Though its sponsors claim their bill would strengthen job security, Californians who lost income due to AB5, or were forced to reorganize their lives because of it, would argue that it’s more threat than protection. So hated is AB5 that gig workers unloading on Twitter created hashtags such as #RepealAB5, #AB5Stories, and #FixAB5.

Not even the exemptions added last summer and the passage of California’s Proposition 22, which carved out special rules for app-based drivers, have been enough to change attitudes about the law. It still afflicts an untold number of Californians who need and want to work but are unable to simply because the government has restricted their freedom to choose the job structure that suits them.

It’s fair to say that the overwhelming majority of independent contract workers don’t want legislation like AB5 in their states, or a federal law that will send them to the unemployment line. U.S. Bureau of Labor Statistics data from 2017 showed that 79 percent of independent contractors preferred their arrangement over a traditional job. Freelancers want the flexibility that’s been created by the gig economy. They choose their hours, and the companies they work for; are free to try new fields; take advantage of the mobility that lets them avoid rotten bosses; and have the option to work only when it’s necessary.

The 40-years-and-a-gold-watch career, once a cornerstone of the American dream, has been retired. Workers now go through a series of jobs, a dozen or more over a lifetime. Members of tomorrow’s workforce could conceivably have that many in a year.

According to Ceridian, a human capital management software company, the coming decade will bring steady growth to the gig economy, which is not only here to stay but will continue to grow exponentially.

In 2018, Morgan Stanley predicted independent contractors could make up more than half of the U.S. workforce by 2027. Fueling the growth in part is job satisfaction. Research, says the investment house, has found that “freelancers think highly of their personal productivity.”

The unions and busybody elected officials who want to dictate the terms of employee-employer relationships won’t be able to stop the coming wave. But, as California’s AB5 showed, they will be able to inflict pain along the way. And it seems that’s exactly what they intend to do.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

Scroll to Top