As the economy of the United States shifts into the so-called ‘gig economy’ California took big steps in cracking down on new potential abuses, but the bill may be a bit of a double-edged sword.
Gig Economy Growing:
For those of you who haven’t heard the term used before, the gig economy is defined by more and more people changing their work arrangements to essentially be independent contractors.
These contractors can then work under companies that don’t have to officially hire them as full-time employees.
This works a lot better in a digital world, where a myriad of telecommuting platforms and services exist. It has become easier and easier to get work done outside of a traditional office or set location.
With this economy, more and more people want the agility to manage their own hours, and enjoy the other benefits of being self-employed, for example, spending more time with their families.
According to Forbes, a massive majority of 80% of freelance workers would not prefer to work in a more traditional salaried position.
Favoring the freedom and forms of work that they receive as a separate contractor as opposed to a conventional job, where they may not enjoy their work to the same extent.
As the United States is transforming further and further into this gig-based economy, there are fewer and fewer people entering in more traditional 9-5 jobs.
There is a constant stream of new apps or companies that are creating new markets entirely, or bringing big changes to old ones.
The ‘employees’ aren’t directly hired by these companies, instead, the ride-sharing service provides the platform for riders and drivers to match. The drivers serve as a third party to the app. It is in that gray area of being a semi-contracted worker where some of the problems are growing.
AB5, Defining the Grey Areas:
image source: sfchronicle.com
This bill built on the California state Supreme Court ruling Dynamex, which required the classification of certain individual contractors as official employees. It was designed mainly to target ride-sharing apps, seeking to classify drivers as employees.
The California bill does do a lot in the way of protecting these workers more than any legislation to date.
Currently, companies have been avoiding both federal and state law by classifying ‘workers’ as independent contractors rather than actual employees.
They get around employment standards, wage rules, and commitments to unemployment funds.
AB5 follows three main tenants that establish how a business should classify a worker or a contractor:
It states that a…
person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work.
the person performs work that is outside the usual course of the hiring entity’s business.
and the person is customarily engaged in an independently established trade, occupation, or business.
Under this definition, it would seem that specifically ride-sharing apps and other new gig economy businesses are the main entities that were targeted by this bill, as this is where most of the abuse happens.
image source: usatoday.com
With a large and growing category of new workers, there isn’t a lot of regulation or control over the indirect contracting market.
Companies often use these loopholes in ways that abuse their contractors.
For example assigning these workers the same hours of a full-time employee, often at less pay.
Beyond that, the biggest kicker in that situation is that the workers also receive no health or other benefits.
Healthcare specifically has to come out of their pocket, which means if someone takes ill suddenly and can’t work to cover the costs of healthcare, they may go bankrupt.
Another major issue is that there is no direct job safety in these new jobs that is afforded to employees with tenure that some more conventional workplaces may provide.
One of the most eye-opening and scary reports that we have seen detailed the horrible cases of the abuses that drivers for Uber, in particular, had to deal with.
According to the Transport Workers Union, nearly 1 in 10 drivers were physically assaulted on the job, and approximately six percent were sexually assaulted.
These numbers are higher than in most other professions.
There is no employer protection for these drivers. Corners are cut in the areas of support from the company.
Reporting bad riders, who may have even committed a crime, is difficult and the information gets sent essentially to an online support ticket system for review.
There isn’t an HR department or some other internal agency specifically for the drivers.
A good industry comparison would be to the older taxi industry, which actually is the employer of the drivers most of the time.
Many companies support laws for example, that increase the minimum sentence for anyone assaulting taxi drivers in states like New York. Overall there are very limited protections for rideshare app drivers.
Unfortunately, the wages earned don’t do much in justifying the increased hardship these drivers face.
One of the biggest and most pressing problems is that approximately 60% of drivers earn below what Uber reports as the expected income for drivers at 16$ an hour.
California assembly bill 5 does a lot in the way of cracking down on rideshare apps. It ensures that they will have to adequately pay drivers who are already working essentially full time for the company.
Uber, Lyft, and Doordash can not survive without their drivers, and they make up the majority of their ‘workforces’ so it only makes sense that they should be treated as legitimate employees.
While this bill will likely cause rideshare companies to take good steps in changing the way their drivers are compensated, the bill is not without its problems in reference to all the other areas its reach affects.
It’s Looking Like Freelancer’s Nightmare:
In the original version of the bill there was no mention of the majority of other markets. Naturally, as it expanded its scope and narrowed its rules, it became clear with an amendment that there would be changes coming for freelance writers as well.
The bill mandates a 35 article limit on the number of pieces a freelancer can write for a person or business. Each article would count against that yearly quota of 35, and even pictures for photojournalists count.
What is the aim of this?
Many businesses that hire freelance writers will often find one writer and stick with them on a per-article basis. They become confident in their writers and accustomed to their style, and pace of work.
This helps them avoid the large investment in a full or part-time writer, but still allows them to produce the same amount of work with a familiar face. While this can lead to abuse, this so far hasn’t been the case.
Many freelancers are happy with their current arrangements. They can pick and choose their clients much more simply than with this bill, and of course, they currently have the freedom to choose their own hours and projects.
With this bill, any employer that wants more projects from a freelancer past the 35 limit will have to officially hire them. Changing the nature of the client/writer relationship.
While on paper it does seem good that writers won’t be exploited at below industry standards, the bill seems to be too broad and reach just a little too far.
It is true that there are a lot of reported cases of freelance writers working for ‘exposure’ and sometimes even abysmal pay. These problems can be addressed in other ways.
The major problem rears its head when you consider that many of the employers that hire repeat freelance writers are small businesses. They can’t necessarily afford to hire their writers for full or part-time employment even if they would like to.
So the only option they have would be to find another freelance writer. This ends up hitting their original writer hard, as they now have to find another client to make up for the lost one.
This writer hopping could be really harmful and lead to a ‘love ‘em and leave ‘em’ culture in the freelance industry. Making the writers seem more replaceable then they are already seen to be somewhat.
Now that this bill passed in California, it is likely to see sister bills start popping up in other states. And if the problems with these bills aren’t addressed there could be a new crisis for freelance writers. The bill has a good mission, but the execution may end up preventing abuse for ride-share drivers and causing it for other freelance workers.
What Lawmakers have to Say:
We reached out for comment to two different assembly members in the California congress. Assemblymember Lorena Gonzalez, the author of the bill, did not return even our requests for comment.
However, assemblymember Cooley of district 8, which includes the capital of Sacramento, did return our request for comment. While no comment was provided by the time of publishing, this story may be updated with it as communications progress.
As the author of the piece, it is important to note for transparency that I do work as a freelance writer. I also live in California so this bill does directly impact me, and how I work.