The California Legislature is currently considering Assembly Bill 5, could make it much more difficult to work as an independent contractor. This is being done in the name of helping workers. However, millions of workers could be harmed by this.
This began with a judgment of the State Supreme Court, which created a new definition of “independent contractor” versus “employee.” People in a very wide number of professions will not be able to work as independent contractors any longer and will need to become employees of the organizations that they work for in order to continue working.
The judgment makes the preexisting labor laws applicable where they were not before, by changing the category of those who are currently “independent contractors” into “employees.” This will be of help to some, but it would harm many others.
Under the new judgment, which the California Legislature is currently working to clarify, it would become much more difficult to qualify as an independent contractor. In order to qualify as an independent contractor, three requirements must be met. The three requirements are labeled “A,” “B,” and “C.”
“A” is where the contractor must not function under direction or supervision, the work is not being controlled, and the contractor functions with full autonomy. “B” is where the contractor is not in the same business as the company from which they receive work. And “C” is where there is no common law employment relationship.
If a worker doesn’t qualify under the above guidelines, they must legally become an employee. This could currently do harm to numerous people and could worsen the prevalent conditions of poverty.
This Supreme Court judgment arose from the abuses of companies that hired workers and bogusly called them “independent contractors” in order to avoid the costs of hiring, and thus, they gained a competitive advantage—they could undercut competing companies which operated with standard, ethical hiring.
However, this judgment, also known as the “Dynamex Decision,” paints with too wide a brush, and could cause numerous people to lose the “gigs” that up until now allowed them to make a living.
With standard hiring comes a lot of baggage for the employee that is absent with independent contracting. For example, if one’s past background isn’t pristine, or if the employer finds that a person is an insurance risk, they could lose their position entirely, because of this new judgment.
Contract work is a great thing if you are disabled or have special needs.
As it stands today, being an independent contractor is a method for an individual to obtain gainful work from a presumably larger “umbrella” organization without ever being micromanaged. An independent contractor doesn’t have to punch a time card.
As it stands today, being an independent contractor, simply put, allows one to work independently. Workers have control over one’s own hours, over the way they perform the work, and over whether and when they need to take breaks and for how long.
Being an independent contractor is a great thing if you are disabled or have special needs. It is a way of informally obtaining work, in the absence of stifling regulation both for the larger company and for the worker. AB 5 would eliminate these freedoms for most positions.
The State of California stands to gain considerable tax revenue from this measure.
A friend of mine was able to avoid becoming homeless by working briefly through Uber. He was able to work on an “on and off” basis. This is not something a person could do as a standard employee. The flexibility of true independent contracting creates a niche in the workforce for people who cannot fit in with the standard, cookie cutter mold of employee.
In the 1980’s, I worked as independent contractor for two different television repair shops as a technician. The independent contractor status allowed me to have the flexibility that I needed due to my disability and temperament. Had I been an employee, it would have been much harder for me to fulfill the expectations of the owners of either of the two shops, and I would be on a time clock, which is something I cannot tolerate.
No one can predict exactly what things are going to look like in the future under this new judgment and the legislation currently being passed that may codify it. However, it appears that some big forces are at work to see that this is passed into law. And it could cause thousands of people in California to lose their livelihood and to thus to be at risk of homelessness.
It is important to acknowledge the other side of this: that millions of Californians who currently work as independent contractors would rather be employees and gain the benefits that go with that. The California Supreme Court, in its judgment, weighed this against the needs of those who must work as independent contractors, and ruled that it is more important that companies in California should not abuse “independent contractor” status.
California legislators are currently deliberating AB 5. I encourage the reader to contact their state representatives.
Jack Bragen lives in Martinez with his wife, Joanna Bragen, and sells books on LULU.com that might interest you.