I’ve got mixed feelings.
That’s a good thing, actually. There are very few unmixed blessings or curses. So I tend to get suspicious when I don’t have mixed feelings about something.
But I digress.
I’m speaking here of AB5, California’s new law defining the difference between contractors and employees.
In case you’ve missed the debates, the law establishes a three-part test*: if a person performs tasks under control of a company, the work is a core part of the company’s business, and the person doesn’t have an independent business in the same field, they’re considered an employee.
* Do you know what field has a different, critical three-part test? Well, quite a few, actually, but I was thinking specifically of the three-part Miller test that determines whether something is obscene. I have to wonder if porn actors will be affected by AB5; as I understand it, they tend to form long-term associations with particular film studios and they get paid by the film or scene, which would seem to this non-lawyer to potentially put them under the AB5 umbrella. If so, by the Law of Threes, it seems like there ought to be a third three-part test that defines their field.
Not as straightforward as it looks at first glance, but clearer than many laws, so, good. There are, of course, some fields that are exempted, mostly in areas where workers tend to be well-paid. Since, in many ways, AB5 is designed as an adjunct to minimum-wage laws, those sort of carve-outs make sense.
Naturally, the Ubers and Lyfts are screaming with rage. Their entire business model is based around large numbers of cheap contractors.
Workers in some non-exempt fields aren’t happy either. Translators, for example, by and large want to remain contractors. There are others. The main argument seems to be flexibility: the ability to work when and as much as they want, and the freedom to refuse specific jobs. Which is reasonable, and I see no reason why the law couldn’t be amended to include more exemptions as consensus emerges. Expect the issue to show up on the agendas at many professional associations’ meetings over the next few years.
Frankly, I’m offended by the approach Uber is taking in fighting AB5. They’re flat-out trying to claim that their business has nothing to do with providing rides. It’s insulting that they think that’s a winning strategy. And their other attack on the law boils down to “It’ll put us out of business. You can’t do that!”
IMNSHO, no business has a right to exist. Times change, people’s needs change, conditions change. Remember “Too big to fail”? How’d that work out? Mixed results, really. But really, if a business had a right to exist, we’d see a lot fewer cars today, because of the laws created to prop up the horse-and-cart industry.
So right now I feel a certain amount of schadenfreude over the ride-sharing industry in general and Uber in particular.
But. Mixed feelings, remember?
We’re also hearing from newspapers who say that AB5 will put them out of business. Why? Because the added costs for delivery carriers will outstrip their advertising revenue. Which is a legitimate concern, I suppose, and again, no business has the right to exist. But I like newspapers a heck of a lot more than I like the Ubers of the world.
Newspapers won a one-year exemption to explore alternatives to their current delivery system.
I’m old enough to remember when delivering newspapers was a viable first job for a teenager with a bike. It’s not anymore. Not in suburban areas like mine, anyway. Now delivery is done by an adult with a car, who drives around flinging papers out of the window. (To be fair, despite my ongoing battles with our carrier–yesterday, when it was raining, our paper was held together with a rubber band; today, in glorious sunlight, the paper in a plastic bag–I have to admit their accuracy is higher than the typical Amazon delivery person’s.)
My point, however, is that at least around here, delivery isn’t done by someone working for the Chron–neither employee nor contractor. They’re employed by an independent company specializing in newspaper delivery. That third-party is the one who needs to worry about whether carriers are employees or contractors. It may affect the rate they charge the Chron and other papers for their services, but to some extent the papers are shielded from employee costs by that separation.
Stay tuned to see how AB5 works out.
Casey, thanks for weighing in on this. Uber is likely correct by saying that it’ll put them out of business–the insurance, the perks, everything–they’ll have to hire fewer contractors and raise the prices. A commentator on NPR said that, well, you might as well call a taxi.
Catlike, I’m also on the fence, but I’m wondering if the law is maybe a bit too far.
Which is poetic justice, I suppose, given the current state of the taxi industry.
It’s not just the obvious costs that are going to hit newly reclassified employers. The administrative issues are going to be a series of nightmares. California has some very strict rules about shifts, meal breaks, and the like. Contractors are responsible for those themselves–and probably have mostly flown under the radar. As employees, the companies will be responsible for tracking, enforcing, and reporting such things.
Gonna be interesting.