| January 05, 2020 12:00 AM
Californians barely had time to ring in the new year before the state's independent contractor law, which went into effect on Jan 1., started wreaking havoc.
The law, formally known as AB5, was supposed to offer more benefits to workers in the modern gig economy. Instead, it has spectacularly backfired on those very workers. Once lauded by Vox as “cracking down on the gig economy” by offering workers “basic labor protections for the first time," AB5 has forced news outlets, including Vox’s parent company, to cut ties with hundreds of freelance journalists in California. This is due to the law’s stipulation that any writer submitting more than 35 pieces a year be given full employee benefits.
AB5 affects roughly two-thirds of California’s 2 million independent contractors, ranging from janitors and childcare workers to retail and construction workers. Notably exempt from the law are white-collar jobs such as medicine and dentistry, but the level of clout matters in this distinction: a physician specialist who contracts his labor is exempt from AB5. A nurse is not.
California has spent decades imposing onerous regulations on its employers and its workforce. There’s no doubt that stay-at-home moms who benefited from freelance writing gigs and some of the state’s 325,000 Lyft and 200,000 Uber drivers will simply have to eat the cost of the government cracking down on their incomes. But for others, this law is simply a bridge too far.
Despite securing an eleventh-hour legal exemption from AB5, truck drivers began to flee the state before the clock struck midnight on New Year’s Eve. The California Trucking Association, one of the many organizations challenging the law in court, claims that it’s fielding daily calls from despondent truckers, plenty of whom have emigrated from the state or plan to do so permanently. Although truckers have thinner profit margins to cushion the blow of the law, it’s not hard to imagine that workers such as interpreters and copy editors, who require multiple clients but are covered by the law anyway, will soon follow suit.
Still, not all hope is lost — at least just yet. Uber and Postmates have launched a sweeping court challenge to AB5. They’re not the only companies or associations to do so, but their case incorporates the most wide-reaching arguments. As Josh Blackman at the Volokh Conspiracy argues, aspects of the suit likely will not hold up in court, but seeing how Uber’s operations have continued unfettered into the new year, it might just be recalcitrant enough to persevere against California’s political poison.
If legal challenges don't force California to change course, another development might. By capping the state and local tax deduction, the 2017 federal tax law forced wealthy Californians to absorb the full cost of their state's high taxes. These taxes, along with the state's complex web of regulations, are harming workers and employers alike, fueling a mass exodus of Californians that is already expected to cost the state a seat in the House of Representatives.
If AB5 further exacerbates the trend, it may be the cold, hard hand of political reality rather than the courts that undoes this disgraceful law.