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Massachusetts Fails to Learn the Lesson of the “Success” From California’s AB 5 – Pacific Research Institute

Massachusetts Fails to Learn the Lesson of the “Success” From California’s AB 5

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The top court in Massachusetts shut down a gig work ballot measure last week in a litigation battle brought on by opponents of independent contracting work. The ballot measure, that was anticipated to pass with over 80% of Uber and Lyft drivers in support in opinion surveys, would have classified drivers from the two respective companies as independent contractors rather than employees.

The decision was decided via a technicality with a provision in the measure: the measure contained two “substantively distinct policy decisions, one of which is buried in obscure language.” The State Constitution requires all parts of a ballot measure to be related. Rideshare drivers will now have to rely on the Massachusetts Legislature, who have about two months left in their session, to decide if they will remain classified as employees or earn the freedom and flexibility of an independent contractor classification.

There is a reason drivers across the nation choose to drive with rideshare companies over a taxi service. Similar to using Airbnb to rent out a room in your home or creating an Etsy to sell your crafts online, Uber and Lyft are side hustles where drivers can maintain their full-time or part-time positions and choose when and where they want to clock in as a rideshare driver. 51% of all drivers have either full-time or part-time jobs and most drive less than 30 hours a week.

Massachusetts would benefit from taking a look at California. September 2019, Governor Gavin Newsom signed Assembly Bill 5 into law in California, reclassifying independent contractors across a multitude of industries as employees. Freelance writers, musicians, translators and more began to lose their jobs even before the bill was signed. 200 freelance writers for Vox Media were fired in the wake of AB 5, replaced with 20 full-time and part-time writers – leaving around 180 writers with nothing.

Freelancing and gig work benefit businesses and workers alike. Businesses who structure their teams around gig workers can hire more to do specialized work while gig workers enjoy the flexibility of choosing their hours, keeping their full-time jobs and maintaining side hustles as their own boss.

Seeing the catastrophe the bill has caused in industries across California, lawmakers and voters worked to reconcile the damage with initiatives and bills that exempted “winners” from the anti-growth, anti-job legislation. 59% of California voters passed Proposition 22 in 2020 granting ride-share companies and drivers an exemption to AB 5. The same lawmakers who passed AB 5 in 2019 passed Assembly Bill 1561 and Assembly Bill 1506 that extended exemptions for licensed manicurists, construction trucking subcontractors and newspaper distributors and carriers. Unfortunately, there are many industries who do not have the support of certain key players in Sacramento who are struggling due to AB 5.

Freelance workers use platforms like Lyft, Thumbtack and fiverr to build their finances and their businesses. Bureau of Labor Statistics data shows that “79% of independent contractors preferred their arrangement over a traditional job.” If Massachusetts does not allow rideshare drivers the classification of independent contractors, many drivers will be left without vital supplemental income.

Massachusetts should look to the experience of California to learn that embracing gig-economy style flexibility and freedom can create a pro-growth economic result, and imposing restrictions on worker freedom can deny opportunities for its citizens to climb the economic ladder.

Emily Humpal is the Pacific Research Institute’s deputy communications director.

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.

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