Freedom Foundation

California’s AB-5 still a job killer

At the end of August, the California State Legislature ended its scheduled nine-month session by sending a slew of bad bills to the governor’s desk for signature.

Among the worst of the worst was AB-5.

Known informally as the “California Job Killer,” the measure was highly sought after by unions for one simple reason: It’s exceptionally difficult to unionize independent contractors and removing that classification from the state employment code would make their lives much easier.

AB-5 applies an ABC test to decide whether a private company can hire an independent contractor. In this test, the company must show:

  1. the hiring entity does not control or direct the worker in performing the work in fact or under the terms of a contract;
  2. the work performed is outside the “usual course” of the hiring entity’s business; and,
  3. the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

In case that seems a little vague, let’s personalize it. Specifically, ride-sharing companies that have become a popular alternative to conventional taxis would now have to prove that hiring drivers as independent contractors rather than regular employees would be working outside the usual course of work performed at their business.

While the bill was intended as a way to give unions direct access to Uber and Lyft drivers, it generated collateral damage, as well. Among the biggest losers were freelance writers working for newspapers or online publications who suddenly lost their jobs or a significant portion of their yearly wages.

This led to headlines like, “California Will Soon Learn Assembly Bill 5 Was a Historic Mistake”.

So, was AB-5 fixed by the end of the legislative session? Only partially.

If you’re a newspaper, you got a pretty sweet deal. Not only are you now exempted from AB-5 (pending a signature from Gov. Newsom) for an entire year, but many job classifications for freelance writers were also exempted in a separate bill (also pending Newsom’s approval).

Other job titles, such as freelance musicians, were also exempted. Oddly, “consultants” — vaguely defined by the bill as “providing substantive insight, information, advice, opinions, or analysis that requires the exercise of discretion and independent judgment and is based on an individual’s knowledge or expertise of a particular subject matter or field of study” — were also exempted.

But if you’re a regular person trying to find work during a time when California is experiencing a historic 15 percent unemployment rate, the legislative “fix” didn’t do anything for you.

Maybe next session. In the meantime, we can all celebrate that the newspapers reporting favorably on AB-5 are no longer being hurt by it. Nor are the political consultants who pushed the bill in the first place.