With House passage of the Protecting the Right to Organize Act, the nation veered one step closer to replicating the federal equivalent of California’s disastrous Assembly Bill 5 law that continues to put hundreds of thousands of independent contractors in the Golden State permanently out of business.
The root problem is the draconian ABC test — a three-part litmus test that presumes every worker is an employee unless the hiring entity can prove otherwise (or unless a specific industry has enough clout to acquire a coveted exemption). The ABC test in California is nearly impossible to pass for most contracting relationships; now the same test is embedded in the PRO Act.
While the PRO Act seeks to overhaul the National Labor Relations Act, as with California’s devious Assembly Bill 5, the disaster is in the details.
To date, approximately 100 professions and industries in California have been exempted from Assembly Bill 5, either in the original law that went into effect on January 1, 2020, or in the “fix-it” bill (Assembly Bill 2257) that followed nine months later. The arbitrary exemption process picks winners and losers, and has resulted in nothing less than total chaos, anguish, upheaval, outrage, lost livelihoods, shuttered businesses, and a slew of lawsuits.
Unlike in California, however, the PRO Act has no exemptions to the ABC test. Should the U.S. Senate pass the PRO Act, California’s catastrophic canary in a coal mine would be the reality for the entire nation.
Here’s how the insane exemption process is still playing out in California:
Before Assembly Bill 5 was signed into law in September 2019, powerful special interests won carve-outs for lawyers, doctors, dentists, architects, real estate agents, CPAs, and others. Meanwhile, hundreds of categories are left out in the cold and forced to beg for relief, including nonprofit organizations, community theater, independent filmmakers, event planners, court reporters, transcribers, videographers, independent health care professionals, physical therapists, mall Santas, and more.
The dumpster fire of Assembly Bill 5 continues to burn despite the erroneous headlines that the subsequent cleanup bill “solved everything” for freelancers. Only a chosen few obtained exemptions in AB 2257. The scorched-earth approach of this dysfunctional policymaking has created a “sausage-making-after-the-fact” scenario that continues to pick winners and losers based on one’s ability to hire a lobbyist, fund a ballot measure, or make enough noise so the bad optics must eventually be squelched by squeamish lawmakers. Now, imagine that process playing out on steroids in Washington.
With passage of Proposition 22 in November 2020, the most notable industry now exempted from Assembly Bill 5 is the very industry the law originally targeted: app-based rideshare and delivery companies, including Uber and Lyft.
But here’s the reality: Most exemptions in Assembly Bill 5 come with caveats, fine print, hoops, and brick walls. Many professions are unable to take advantage of their exemptions. Upon passage of the cleanup bill, headlines proclaimed that musicians were exempt, for example. In practice, only a segment of musicians got relief. Despite their exemption, gigging musicians are allowed only one gig per week per venue, which means a Friday/Saturday booking is not allowed unless the venue puts the band on its payroll. Musicians who play for community theaters, ballet, opera, theme parks, or in orchestras are not exempt.
The journalists’ lawsuit against Assembly Bill 5 continues because there are still unconstitutional restrictions on their work despite the infamous 35-article cap on yearly submissions finally being lifted. Independent videography and broadcast journalism are banned outright. There’s also the caveat that the freelance journalist cannot replace an employee — not exactly a green light for a risk-averse publisher, given the vagueness of the language and the massive fines and penalties a business can incur for misclassification violations.
In another carve-out category, only a handful of specified professions are listed in the Referral Agency exemption, and they must satisfy all 11 requirements to qualify. Tutors, for example, are named, but most tutoring companies cannot realistically operate within the restrictions of the exemption.
Meanwhile within the 13 requirements of business-to-business exemption, business consultants cannot team up; they must be each other’s employees. Subcontracting is a problem, and the independent contractor cannot provide services to customers of the client. Having an LLC or S corporation alone does not exempt anyone from AB 5.The net result is a chilling effect on independent contracting throughout the state. Many businesses are staying away from independent contractors in California altogether even if there is a pathway to an exemption.
The Senate must heed the warning of California’s continually unfolding cautionary tale and stop the PRO Act. Exemptions are not the answer, and the ABC test must never be allowed to infest national labor, employment, and tax laws.
Karen Anderson is the founder and administrator of Freelancers Against AB5.
The Link LonkApril 25, 2021 at 12:34AM
https://www.ocregister.com/2021/04/24/even-with-exemptions-ab-5-is-still-rotten-to-the-core/
Even with exemptions, AB 5 is still rotten to the core - OCRegister
https://news.google.com/search?q=rotten&hl=en-US&gl=US&ceid=US:en
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