Sunday, January 26, 2020

AB5: See the stories of independent contractor lives shattered by the CA law

The harm of AB5 on independent contractors is not an abstraction or a political football. One of the largest grassroots Facebook groups where discussion about the impact of the law is Freelancers Against AB5 -- a clearinghouse of education, information, and strategy for citizen activism of the self-employed harmed by the law. Moderator Karen Anderson took it upon herself to gather these emotion-filled stories of shattered careers - now up to 113 professions -- adversely affected by the law and place them into an accessible database: https://rolls.bublup.com/Anderson/AB5-Personal-Stories:
Hello Members. Here is our archives of personal stories documenting the negative impacts of AB5 categorized by profession. This is a continuing work in progress that I can add to or edit at anytime, so keep your stories coming! There are 113 categories of professions thus far that comprise hundreds of stories from our members. (Photographers, I need your stories.) Please share on social media and be sure to send this link to your representatives in the state legislature on Facebook, Twitter and email.
AB5 harms hundreds of thousands of independent contractors that rely on freedom to determine their rates of pay, when and how they work. When AB5 was debated, select professions were invited to petition, er, beg for exemptions, while others with the same functional business needs were not. That in itself is discriminatory. Now we see independent contractors’ careers halted in their tracks. Notably, even clients of professions exempted from the law are bailing, canceling contracts because of the legal uncertainty and potential liabilities.

SB459 has been on the books since 2012 and it already addresses misclassification in fields where it is rampantly abusive. I do not understand why AB5 was necessary to implement in such a damaging way to so many segments of the economy. AB5 at the very least should be amended to include an exemption for performing artists and no limited number of articles for writers or exemption for small business; however, in the larger scheme of things, I have come to believe only full repeal is a solution. We cannot be patient for months for a fix or to find a way to “adjust” when all of these taxpayers all have bills and must keep a roof over their heads.

NOTE: There is a rally and citizen lobby day at the Capitol in Sacramento on Tuesday, January 28 at 10 AM, sponsored by Assemblyman Kevin Kiley and Melissa Melendez, both Republicans, btw, though this is not a partisan issue. https://www.facebook.com/events/2577638375849505/



Since shuttering my national progressive political blog, Pam's House Blend, back in 2013, AB5 is the first topic to re-activate me because it runs at the foundation of what I have done as a working professional -- I've been a small business owner, an employee of a large company, and a freelance reporter and project manager as an independent contractor. I’m a Democrat from North Carolina that moved to CA in 2017. Little did I realize that too many lawmakers here have taken leave of their senses, only proving a supermajority of either party can result in bad lawmaking and a heavy hand. The Democrats at the state and national level need to understand this is no way to handle labor in an economy so diverse and evolving in its make up. A sledgehammer approach is not healthy or resembles anything remotely like common sense.

As my blogosphere colleague Markos Moulitsas at Daily Kos (no Red State or Town Hall, btw) made clear in his post, "Democrats across the country seek to make California's mistake, destroying careers of freelancers," legislation impacting people’s ability to live should never be made in an arbitrary manner as AB5 was, and current DNC Chair Tom Perez, when he was Barack Obama’s labor secretary, aggressively fined bad actors under existing fed law.

**

How to find your lawmaker to write/call: http://findyourrep.legislature.ca.gov

How they voted (and see how much money they received from Big Labor):
Sen Vote: https://legiscan.com/CA/rollcall/AB5/id/890316
Assm Vote: https://legiscan.com/CA/rollcall/AB5/id/890318

Just a reminder, folks. There is a federal labor bill that underscores the very ABC test that is decimating independent contractors here at the state level with AB5. It's H.R. 2474, and take a look and see who is co-sponsoring this bill.

https://www.congress.gov/bill/116th-congress/house-bill/2474/text 

Side note: Today I received a campaign call for my Congressman, Jim Costa, and said that I would not support his re-election if he supported HR 2474 as it stands affecting independent contractors. The polite caller took my information because at this juncture, he's not a co-sponsor.
So be ready to make your case now that the campaign calls are heating up.

How to find your lawmaker in DC to write/call about this legislation: https://www.govtrack.us/congress/members


Good reads...  

Saturday, January 18, 2020

Fighting #AB5 - it may eventually lose in court, but how many careers will be destroyed in the interim?


AB5, the new law now in place here in California as of January 1, ostensibly passed to "protect" workers exploited by companies misclassifying them as independent contractors, has wreaked so much havoc that careers are being decimated -- contracts lost, potential gigs eliminated -- all because of a lack of understanding by lawmakers in support of it about the wide spectrum of the ways the "gig economy" works.

The one thing it is NOT is a partisan issue, though defenders of AB5 try to paint hard working professionals in opposition to AB5 as some sort of right-wing nutter base trying to flip the state Red. People and businesses across every demographic are hurt by a law passed by, yes, Democrats, but it's harming what is a natural target voter base as well. Markos Moulitsas at Daily Kos, no Red State or Town Hall, btw, made clear in his post, "Democrats across the country seek to make California's mistake, destroying careers of freelancers," that this now-national issue (see House Bill 2474) is an albatross around the necks of this state government and other states proposing AB5-clone bills.
Note that existing state law in California, and federal law, already punishes misclassification of employees as freelancers, when they should be employees. None other than DNC Chair Tom Perez, when he was Barack Obama’s labor secretary, aggressively fined bad actors. Meanwhile, Democrats across the country now are playing copycat to a law that its very own author, Assemblywoman Lorena Gonzales, admits was arbitrary. Literally "Was it a little arbitrary?” said Assemblywoman Gonzalez. “Yeah. Writing bills with numbers like that are a little bit arbitrary.”  
Legislation impacting people’s ability to live should never be arbitrary

One of the largest grassroots Facebook groups where discussion about the impact of the law is Freelancers Against AB5. It serves as a clearinghouse of education, information, and strategy for citizen activism of the self-employed harmed by the law. One member, Peter Kalivas, has spent a good time digging and researching how this misguided law will not stand legal muster and muses aloud why this bill exists at all. From his post (this group requires subscription/admission, I added ref links):
Everything I write is based on research I have done, and I could provide documentation to support my statements. 
In the opening text of the AB5 Bill/Law, the Dynamex court case is referred to as its inspiring incident. Therefore, I think it is important to review that case for context before I proceed with my feedback about AB5 - because it is relevant. 
The Dynamex court case decision was based on the complete opposite of the AB5 construct. Between 2004-2005, Dynamex de-classified employees WITH benefits into independent contractors with NO benefits, as an effort to save money. This case was brought by a small group of drivers who after 3 months of transition realized they preferred being employees, and filed a misclassification lawsuit. 
I have access to testimonials from other Dynamex workers who ultimately appreciated having the new option to accept and refuse work; due to the new flexibility independent contracting gave them. Ultimately, the court decision took away all Dynamex worker’s right to choose which employment situation they preferred resulting in the construct of the ABC test to more specifically determine what an employee was despite that already being defined at the federal level.
The Dynamex couriers who appreciated and preferred the transition into an independent contract have since spoken out against those who brought on the original court case. 
So the point of AB5 as a response to the Dynamex case is a very challenging rationale to resolve that elects for some less clear reason to take away the rightful and legal option for persons to choose their own working conditions that best suited THEIR needs. As a failed attempt to course correct the misclassification of workers, AB5 has confused what an “employee” is while separating U.S. citizens from their right to choose the conditions of how they choose to work under legal federal codes and allowances. 
So now there are multiple sources applied at the state level that have various definitions of what an “employee” is and what self-employed is. It could be presumed that our FEDERAL government’s definitions hold the highest authority over the State. But AB5 does not follow that rationale. 
The IRS was formed in 1862 and at the Federal level we have two classifications of work in the U.S. - Employee and Self-employed. And according to a 2019 survey in USA today 1/3 of Americans are independent contractors – thousands of people who contribute to the economic vitality of our country. 
As of today, the Internal Revenue Service (IRS) at IRS.gov defines an individual who works as an independent contractor or owns a business as a sole proprietor or partner is self-employed.

Furthermore, the California Employment Development Department at EDD.CA.gov takes its definition of self-employed from the IRS, which it must then use to follow the definition of what self-employment is - which is either: a self-employed individual, independent contractor, or general partner.

So with this in mind…why then, is a current State Assemblymember using the Dynamex case from 2005 to inspire the formation of AB5 in 2018? Perhaps the Labor Unions involved in AB5 think the now 14-year-old Dynamex case was an opportunity to manipulate the Federal definition of what “self-employed” means or doesn’t mean for a more defined purpose. 
Assemblymember Lorena Gonzalez-Fletcher (@LorenaAD80), can you please provide documentation that gives you the authority (as a state-level official), to obtain an exemption for the State of California to use a different definition of self-employment than the IRS? What gives the State of California the authority to use a different definition of employee or self-employed in any new way it wants, and one that is different than the highest level of government? 
The California EDD website states, “As of January 1st, 2020 all workers are now employees.” The term “worker” can either mean an “employee” or an “independent contractor.” Without justifying documentation to decipher which definition to use (EDD or IRS) - it is not convincing that AB5 is even legal or enforceable. 
Let me be clear, the Borello and the ABC tests were devised to determine what an employee was, NOT what self-employment was, because self-employment is already defined at the Federal level.
Applying theses tests to a person who has declared and can prove themselves, as defined by the IRS as self-employed is then irrelevant.
Next feedback point is that… 
AB5 contradicts itself and lacks an open transparent process in the following ways: 
In the opening text of AB5, it refers to WAGE ORDERS of which there are 17 that describe which fields and occupations are exempted already from employee status, including how and why. 
So, here is the contradiction within AB5… 
We have the Wage Orders referred to, (code 10-1002, a previously existing document applied to AB5 says Creatives and the Professional Performing Arts are already exempted from being defined as employees), and then we have a totally different document created for AB5 that does not exempt Performing Artists. Instead, it lists a Fine Arts exemption determined by privileged parties including representatives of labor unions through a conflicted process. 
The exemption process, I argue is contentious because we, (the workers of California), were not all equally privileged to understand, nor participate in the process of how exemptions were determined. All businesses (for profits and nonprofits alike) need be registered with the state, so we could have easily received a notification from the Secretary of State and/or Attorney General about how our specific business can go about seeking an exemption. 
Speaking of enforceable documents… 
SB 459 signed by Governor Jerry Brown in 2011 specifically deals with the overt misclassification of workers. When pressed about this bill, ASM Gonzalez-Fletcher stated SB 459 wasn’t enforceable and yet, there have been numerous court cases that clearly demonstrate that it has been. 
Several California Senators and Assemblymembers I have spoken to, publicly agree - including those who have since flipped to agreeing that AB5 may not be enforceable for the reasons I state. The state does not have higher authority than the federal government to redefine what an employee is, nor completely ignore the federal definition for self-employed. 
AND so before I ask my clarify question, here is my final statement:

I have demonstrated that I have spent time doing the investigative research relating to AB5; and I am not convinced the author, nor its sponsors have.

There are too many discrepancies that make this bill (which is now a law), challenging to acknowledge. 
AB5 is based on an assumption that self-employed people are in need of help from themselves because they are incapable of negotiating the terms and conditions of their own contracts to provide services of their own creation. Something 1/3 of self-employed Americans across the United States have CHOSEN to do for over 100 years. AB5 now takes away that legal choice for so many. 
One final thing the author does not understand or acknowledge is that long term, Full-Time jobs (with benefits), with one exclusive employer for Professional Performing Artists RARELY exists, with minimal exceptions including union jobs across the United States. Most artists work on a project, gig, event, short term, or seasonal basis - and this is standard practice in our industry. 
In closing, I would like to ask my one clarifying question:
What IS the real reason for AB5? 
Peter G. Kalivas, PGK DANCE!

My commentary/response after the jump...

Thursday, January 9, 2020

AB5 battles - why pit segments of the self-employed against one another in the gig economy?

An unhelpful Tweet from the group Gig Workers Rising (@GigWorkersRise) that I responded to. https://twitter.com/GigWorkersRise/status/1215333011790561280



This isn't the time to pit one independent contractor group's rights over another's when the Gig Economy has different facets that were NOT acknowledged or accommodated by AB5. It's (exceedingly) bad law to boot, and to act as if the people hurt by AB5 are somehow to blame for incorrectly following the definition of an IC to begin with is horrendous.

But this is going to be hardball, online and offline, to right this ship. No one wins with acts like this. The best way to be effective is to communicate with and meet your lawmakers, write letters to the editor, and organize with positivity to assert why AB5 is harming your ability to make an honest living. http://findyourrep.legislature.ca.gov/

Side note: I looked up Gig Workers Rising, and gee, I'm sure it's a coincidence, but it's the same address of a chapter of the AFL-CIO-affiliated American Federation-Musicians that supported AB5. https://gigworkersrising.org/


And...

Why was AB5 needed when SB459 was already on the books?  Senate Bill No. 459, passed and has been law since 2012 addresses misclassification:

"California already has a worker misclassification law it’s not enforcing: California Senate Bill 459 is an existing law that makes it unlawful for companies to misclassify workers. This law puts its money where its mouth is. It gives the state Labor and Workforce Development Agency the power to fine companies $5,000 to $25,000 per violation for willfully misclassifying workers and allows the state Labor Commissioner to assess additional civil and liquidated damages.

The law has been in effect since January 1, 2012 but so far has not been used to challenge worker misclassification at Uber, Lyft, or other Gig Economy platform companies."

Tuesday, January 7, 2020

"Request for cleanup" bill submitted by sponsor of misguided AB5

The blowback from the "unintended consequences" of California's AB5 law -- that has effectively eliminated independent contracting (unless your profession managed to get an exemption) -- is astonishing, and the heat of an enormous segment of freelancers who are now losing contracts and work because of the sledgehammer ABC test has forced the law's sponsor to respond -- with a feeble admission the law is poorly written. See my earlier post.

AB 1850, as introduced by Lorena Gonzalez, does not propose to suspend enforcement of AB5 to stabilize the negative impact on the state economy, it merely asks that the legislature to clarify how it is implemented...

AB 1850, as introduced, Gonzalez. Employee classification.
Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of specified wage orders. 
Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is 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. This test is commonly known as the “ABC” test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification. 
Existing law exempts specified occupations and business relationships from the application of Dynamex and these provisions. Existing law instead provides that these exempt relationships are governed by the test adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. 
This bill would declare the intent of the Legislature to enact legislation that would further clarify the application of the California Supreme Court’s decision in Dynamex and recently-enacted requirements under the Labor Code. 
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: 
SECTION 1. It is the intent of the Legislature to enact legislation that would further clarify the application of the California Supreme Court’s decision in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 and requirements under Section 2750.3 of the Labor Code.

That's it. After all, with each passing quarter, independent contractors who are now "employee" must be paid, and taxes are required to be withheld by these newly minted "employers". What would retroactivity mean for state withholdings gathered under AB5 if the "employees" go back to being independent contractors?

And we STILL have the open question of why AB5 was needed when SB459 was already on the books? It makes it illegal to misclassify employees as independent contractors -- with stiff fines. It was never used. (https://tinyurl.com/r9u7rzo)

HISTORY: Gonzalez was confronted on the floor by Senator Jeff Stone's on September 10, 2019 during debate on AB5 and the infamous exemption request form (produced by the AFL-CIO, labeled on its bottom). It's worth your watch. Skip to 9:06. (via Karen Anderson of Freelancers Against AB5).




Good reads...

Friday, January 3, 2020

California's AB5 - wreaking havoc for independent contractors

The CA legislature goes back into session next week, and the new AB5 law is now in effect, with significant consequences ahead for California's economy. It's the law of unintended consequences -- or is it?

Some topics below:
* So I called the EDD for information about compliance...
* What does compliance look like?
* Why was AB5 needed when SB459 is already on the books?
* This isn't jaywalking...

Those who work as independent contractors/freelancers (unless you were in a professional classification that lobbied and won an exemption) now face the prospect of being fired, or less-hireable instantly. Why? Because those who hired you for your services now have to hire you as an employee. And they have to fulfill all labor laws -- that also means payroll withholding taxes. Ostensibly this is to protect service professionals that are routinely denied these rights by large companies exploiting and misclassifying them as independent contractors.


Good reads...

But AB5 harms hundreds of thousands of independent contractors that rely on freedom to determine their rates of pay, when and how they work. The massive problems are exemplified by the enormous number of exemptions -- the law is too broad, a sledgehammer. Since the legislature reconvenes on Jan 6, expect amendment proposals on the table. AB5 needs to enumerate its language to include musicians in the exempted Fine Artists category, because the bill as signed into law does NOT specify musicians. Or, more broadly, adopt amendment language that includes many more groups similarly affected.

Apparently enforcement by the Employer Development Department will not occur until July, but what are contractors and those who hire them supposed to do in the meantime?! Payroll has to be set up and withholdings will begin, and payments will flow to the state coffers.

I called the EDD...
I personally called the Employer Development Department last week. If you want any education about how to comply, or who is affected...you are pretty much SOL. I was told to go to the EDD and FTB web sites. The option to talk to a human is limited - I was connected to the "Auditor of the Day" and got voicemail, left a detailed message, and was never called back.

They believe that putting a comprehensive web site and directing people there is sufficient when many independent contractors and those who hire them have never been an employer, have no experience doing payroll/withholding and submitting paperwork to the state for this. So there goes another expense -- hiring a payroll company to do that, or learn to do it yourself (with the high risk of making errors - 1/3 of companies do -- and receiving fines). Madness.

What logistically will happen if AB5 is rolled back with exemptions retroactive back to January? I cannot tell you. More confusion:
"Enforcement will be slow and uncertain: AB5 does not tell businesses that they must reclassify their workers as of January 1, 2020. Instead, the new law allows cities and the state to challenge a company’s worker classifications through legal action. California government agencies will have to spend time and legal fees to sue companies and determine through the courts whether the workers are employees or independent contractors."
So, what does compliance look like for these new "employers" and "employees"?  There you'll need to consult with an an employment attorney or accountant - and many of them aren't up on AB5. The Franchise Tax Board and Employment Development Department note AB5 on their sites -- they will enforce the law. I'm sure if you are employing a freelancer, you don't want to be caught with multiple violations. The uncertainty is why many businesses, including magazines, fired their entire freelance staff in 2019 in anticipation of compliance with AB5 (see Vox layoffs).

Question...why was AB5 needed when SB459 was already on the books? Perhaps someone out there can shed light on this...I came across this article that begs the question why CA passed AB5 at all when there is a law already on the booksSenate Bill No. 459, regarding misclassification (https://tinyurl.com/r9u7rzo):
"California already has a worker misclassification law it’s not enforcing: California Senate Bill 459 is an existing law that makes it unlawful for companies to misclassify workers. This law puts its money where its mouth is. It gives the state Labor and Workforce Development Agency the power to fine companies $5,000 to $25,000 per violation for willfully misclassifying workers and allows the state Labor Commissioner to assess additional civil and liquidated damages. 
The law has been in effect since January 1, 2012 but so far has not been used to challenge worker misclassification at Uber, Lyft, or other Gig Economy platform companies. 
From the SB459 itself:
SB 459, Corbett. Employment: independent contractors. Existing law prescribes comprehensive requirements relating to minimum wages, overtime compensation, and standards for working conditions for the protection of employees applicable to an employment relationship. 
This bill would prohibit willful misclassification, as defined, of individuals as independent contractors. The bill also would prohibit charging individuals who have been mischaracterized as independent contractors a fee or making deductions from compensation, as specified, where those acts would have violated the law if the individuals had not been mischaracterized. The bill would authorize the Labor and Workforce Development Agency to assess specified civil penalties from, and would require the agency to take other specified disciplinary actions against, persons or employers violating these prohibitions. It would also require the agency to notify the Contractors’ State License Board of a violator that is a licensed contractor, and require the board to initiate an action against the licensee. The bill would authorize an individual to file a complaint, as specified, to request the Labor Commissioner to issue a determination that a person or employer has violated these prohibitions with regard to the individual filing the complaint. The bill would authorize the Labor Commissioner to assess civil and liquidated damages against a person or employer based on a determination that the person or employer has violated these prohibitions. 
This bill would provide that a person who, for money or other valuable consideration, knowingly advises an employer to treat an individual as an independent contractor to avoid employee status for the individual shall be jointly and severally liable with the employer if the individual is not found to be an independent contractor. This bill would exempt from the provisions regarding joint and several liability a person who provides advice to his or her employer or an attorney who provides legal advice in the course of practicing law.
So what gives?
AB5 Bill sponsor Assemblymember Gonzalez (on Twitter) -- perhaps she can give specific insight/rationale. Ostensibly the state could have charged Uber or Lyft with misclassifications violations under this statute (they were not). SO...a possible reason I can think of why they passed AB5 was to try to explicitly define what an independent contractor is (SB-459 does not). But the definition as outlined in AB5 makes it nearly impossible for any IC to pass muster. What it does do is place onus on newly minted "employers" to do withholding of taxes that go to the coffers for state unemployment, disability, etc., enforced by the Franchise Tax Board and Employment Development Department.

Call and write your representative...
If you don't know who they are, you can find them by your address and zip code: http://findyourrep.legislature.ca.gov/ .. Better yet, go make an appointment to see them in the local office or in the legislature in Sacramento. They need to see the faces of hard-working, self-employed constituents whose careers are being harmed by AB5. Find out why and how they intend to help AB5 be retooled to serve Californian independent contractors that want to remain independent.

This isn't jaywalking...
NOTE: I've also heard that some hiring freelancers/contractors will simply break the law and hope they don't get caught and do business as usual. To try to fly under the radar until AB5 is addressed. Do you trust that you won't get reported? You can't frame that as "a protest" to simply ignore the law. If you think that is a truly a protest, then feel free to call up the EDD and FTB and let them know you're openly in noncompliance with AB 5 in this manner and see how that goes...

It's the WE, not the ME time. My suggestion - redirect your anger and frustration and DO something that helps roll AB5 back, please. There are millions in the same boat as you are. And many who are not, but will stand by you and work to make this equitable and just for everyone.