Republican Lawmakers Work To Reverse California’s Anti–Independent Contractor Law

Tuesday, February 11, 2020
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As more Californians lose work because of Assembly Bill 5 (AB 5), the new ban on some independent contractor relationships, the California Senate Republican Caucus and Republicans in the California State Assembly are introducing bills to stop this new law from doing more damage. I hope the state’s Democratic leadership will listen, because those who are being hit hardest are in demographic groups who historically have been disadvantaged, including single parents—particularly women, immigrants, and those with family members who have a significant illness.

This year, Senate Republican Leader Shannon Grove and members of the California Senate Republican Caucus have introduced legislation to counteract the negative impacts of AB 5. Senator Grove has introduced Senate Bill 806, which would repeal and replace AB 5 with a new determination of independent contractor status that is much more expansive and that would include most existing business arrangements.

Last year, the California Senate Republican Caucus offered its own bill to preserve independent contractor relationships. To counteract AB 5, Senate Republican Leader Shannon Grove introduced SB 238, which would partially return independent contractor status to where it was before AB 5. SB 238 would replace California law regarding how a worker should be classified—as a contractor or as an employee—roughly on par with comparable federal law as represented in 1938’s Fair Labor Standards Act.

In the State Assembly, Representatives Kevin Kiley and Melissa Melendez have introduced AB 1928. This bill would return the determination of independent contractor status to what is known as the Borello test. This bill would largely permit contractor classification for a worker unless the hiring party has substantial control over how the task is performed and achieved.

This bill would also be a major improvement over the new law, which is so flawed and damaging that literally all state lawmakers agree that it needs to be changed.  And if you are a supporter of simple, short laws, take a look at AB 1928. You will be impressed with just how much strikethrough there is of the existing law.

The continuing saga of AB 5 is critically important, not only because it is destroying economic opportunities and the freedom of choice but also because it provides valuable insights into how lawmaking can go so wrong, and why.

AB 5 is the product of a perfect storm of judicial activism, idiosyncratic legislator agendas that are at odds with what constituents want, a lack of economic sense, and a failure to listen to the minority party.

This all began with a state supreme court decision in which the court decided to stick its toe into the waters of economic policy making and presume that all workers should be considered employees unless it could be demonstrated that they satisfy very stringent terms for working as an independent contractor

Defining whether an individual can operate as an independent contractor goes far beyond the court’s purview. Creating laws about employment relationships is the responsibility of state lawmakers, not the court.

The court’s decision was the first domino to fall, and it opened the door for AB 5, which codified the court’s decision in new legislation. AB 5’s flaws were obvious from the very start. The bill was passed almost exclusively along party lines, with 59 of 60 Democrats voting in favor. Representative Adam Gray, who represents the Merced area, a relatively poor district in California’s Central Valley, was the lone Democrat who voted against the bill.

AB 5 is a law that has no legitimate purpose. Surveys by the Bureau of Labor Statistics show that nearly 80% of independent contractors prefer their independence over working as a traditional employee. Yet the state’s Democratic leadership still chose to take away this right, despite individual preferences to remain independent as well as strong opposition from the minority Republican party.

Democratic lawmakers believed that taking individual freedom was justified in return for their idiosyncratic preference for supporting expanded unionization. By forcing workers into formal employment relationships, unions have new opportunities to try to organize labor. Perhaps not coincidentally, unions are among the strongest political supporters of many state lawmakers, including the authors of AB 5.

In 2019, Senate Republicans criticized AB5 during debate because it favored certain industries over others by providing some industry-specific discriminatory carve-outs and exemptions, including politically important industries such as physicians and attorneys. Republicans also correctly predicted that the bill would destroy existing work relationships.

The law has been operative for only five weeks, and it is already clear that it is extremely costly. Public outcry has been so strong that state Democrats are trying to modify the bill. But they are trying to do this in all the wrong ways. They are trying to figure out what other industries that they missed the first time need carve-outs and exemptions from the law. But this is simply doubling down on their previous mistake. No independent contractor should be forced to give up their freedom to practice their trade the way that they wish. The law should be reversed.

Democratic lawmakers seem to have believed that previous independent contractor relationships would seamlessly transition into formal employee relationships. But nothing is further from the truth. AB 5’s author, Democratic Assemblywoman Lorena Gonzalez, is hoping to obtain $20 million to subsidize small, nonprofit arts organizations to hire their independent contractors as employees. This is just another example of why the law fails. Politicians should not be passing laws in which some industries and businesses are given preferential political treatment.

Independent contractor responses from the new law reflect shock, anger, and sadness. One worker writes: “I don’t remember electing any unions to determine how I earn my living or service my clients. Yet unions literally WROTE AB5, a law I’m supposed to abide by. AB5 CRUSHES my prospects (just because) I live in California. How is this ok . . . ?”

Another writes: “They’re (the Bill’s supporters are) misogynists. AB5 hurts women disproportionately. The unions bosses that are supporting it, all seem to be men. Women need flexibility as caregivers and as we enjoy the ability to dip in and out of the workforce as needed and wanted.”

And if you wonder about how expanded unionization played into AB 5, note that Representative Lorena Gonzalez, AB5’s main author, tweeted “I think it would be great if all workers were in unions.” 

California is an economy of nearly 40 million people where only certain voices are heard. Those who are heard are the true believers in the pure politics of the state’s Democratic leadership.

I urge you to read more about AB 5 and contact your local representatives regarding your views. Unless voters speak out, government overreach in California will continue to grow.