In context: Being an independent contractor offers many benefits that traditional 9-to-5 jobs do not, including flexible hours, the ability to work from home, and not having to deal with office politics. The trade off is that workers have to be responsible for their own benefits. Things like insurance and retirement planning rest on the shoulders of the individual rather than the companies that contract them.
The gig economy has solidified itself as a part of the US gross domestic product. As more and more workers look to companies like Uber and Lyft for part-time or even full-time income, the industry is going to continue to grow.
In a supposed effort to protect these workers, California enacted Assembly Bill 5 (AB5). The new law took effect on January 1 and puts restrictions on how businesses classify independent contractors or freelance workers. Most notably, AB5 sets a very low bar in some industries for what can be considered full-time work.
It was intended to help gig-workers obtain benefits, like medical insurance and retirement plans from their employers, by forcing companies to hire them full-time. However, AB5 is having the opposite effect as employers ditch their freelancers in favor of fewer full-time workers.
USA Today notes, Uber and others are fighting against the AB5 by trying to get it amended through a ballot initiative. While ride-sharing drivers seem to be the most obviously affected, the law began impacting freelance writers before it was adopted.
"Anyone who writes a weekly column, for instance, is likely out of a job if their publisher cannot hire them as an employee. The bill also penalizes freelancers who create content in non-traditional formats such as blog posts, transcriptions, and listicles, the latter of which are often requested in bulk."
Ironically, Vox Media touted the law's passing as a "victory" for California gig workers but notes that in 2020 it will be eliminating most of its California freelancers who contribute to its SB Nation sports sites.
"In the early weeks and months of 2020, we will end our contracts with most contractors at California brands," SB Nation Executive Director John Ness said in a December blog post. "This shift is part of a business and staffing strategy that we have been exploring over the past two years, but one that is also necessary in light of California's new independent contractor law, which goes into effect January 1, 2020."
The problem is that the new law limits freelancers to 35 contributions per year to a single publication. Anything above that limit and the company has to consider hiring the freelancer to a full-time position. To put that in perspective, writers who contribute only three articles a month to a website have to be offered full-time work.
"The 35-piece per publication limit comes out to less than one piece per week," Reason notes. "Anyone who writes a weekly column, for instance, is likely out of a job if their publisher cannot hire them as an employee."
So instead of transitioning gig workers into full-time positions, AB5 is already causing publishers both within and outside of the state to avoid hiring contributors from California.
Image credit: Cory Seamer via Shutterstock