If you’ve been following me on Twitter, no doubt you’ve seen some of my many tweets about Assembly Bill 5 (AB5), a law in California that took effect on Jan. 1, 2020. AB5 places significant restrictions on the ability of companies and other hiring entities to classify state residents as independent contractors. It was aimed largely at gig economy companies like Uber and Lyft, but it has devastated the livelihoods of many freelance journalists and other folks who have worked happily for years as contractors.
In May 2019, I was laid off from a full-time editorial job I held for the better part of 15 years (there was a brief hiatus in 2014 when my original employer went bankrupt and a different company acquired its assets). Given my age (now 61) and the sorry state of the media business, freelancing appeared to be my best hope to earn an income in my chosen profession. Then along came Dynamex and AB5 to throw a monkey wrench into those plans.
The ABC Test
“Dynamex” refers to a 2018 California Supreme Court ruling that imposed a stringent new “ABC” test to determine whether workers can be classified as employers or contractors. To be classified as a contractor, you must meet all three parts of the test. The problem for journalists is the “B” part. It states that the person must perform work that is “outside the usual course of the hiring entity’s business.” It is widely presumed that journalists fail the “B” test if they contribute to a hiring entity engaged in journalism, such as a magazine or news website.
The ruling was limited to wage orders, and for this reason, there’s now some dispute about whether it actually applied to journalists. But a few out-of-state publishers severed ties with freelancers in California due to fears that the ruling would compel them to hire the writers as employees.
AB5 codified the ABC test and made it part of the state labor code. It expanded the ruling to cover the entire labor code, leaving no doubt that the ABC test applies to journalists. But it also provided exemptions. Exempted professions include doctors, dentists, psychologists, insurance agents, stockbrokers, lawyers, accountants, engineers, real estate agents, marketing writers, graphic designers, and fine artists.
The bill was authored by Assembly member Lorena Gonzalez, a Democrat from the San Diego area. Journalists and photographers pleaded with her for a full exemption, but instead they got a partial one. Clients can accept up to 35 submissions per year. After that, they must hire us as employees or stop working with us. In the real world, it’s almost always the latter. It applies whether or not the client is based in California.
Gonzalez acknowledged that the number was arbitrary. She wanted to prevent publications from using freelancers as weekly columnists, so she halved the threshold to 26 and then added nine more. In today’s media environment, much of the freelance work is for online publishers who offer high volumes of short assignments. Many writers reach the 35-submission limit in a matter of weeks or a few months.
The B2B Exemption
AB5 also has a so-called “business-to-business exemption,” but it is complicated and open to interpretation. Even Gonzalez has made conflicting statements about whether journalists can use the exemption. On Oct. 11, she told a group of freelance writers that she was not optimistic that we could use it. On Dec. 19, she tweeted a question to journalists, asking if it would be helpful if the bill were amended to clarify that journalists can use the exemption. That appeared to be an acknowledgement that the exemption isn’t clear. In January, during a contentious 20-minute interview on a TV station in San Diego, she said that journalists could use the exemption.
Obviously, the law hasn’t changed. But with each passing day, we see more examples of freelancers losing business due to AB5. Clients are dropping California freelancers or reducing assignments. It is now common to see freelance job listings stating that they are not open to writers in California. Others are requiring California freelancers to incorporate as LLCs. In California, it costs $800 per year to be an LLC.
Laura Curtis, a policy advocate for the California Chamber of Commerce, posted an explanation of why the exemption isn’t workable. Gonzalez continues to state that legitimate freelancers and sole proprietors are protected in AB5, but it is clear that she’s wrong.
Gonzalez has acknowledged the need for changes, but under the normal legislative process, any amendments won’t take effect until 2021. Meanwhile, the American Society of Journalists and Authors and the National Press Photographers Association have filed a federal lawsuit against AB5. The lawsuit narrowly targets issues affecting journalists and photographers. The plaintiffs contend that AB5 violates the 1st and 14th amendments to the Constitution by offering full exemptions for some “speaking professions” (marketing writers, graphic designers and fine artists) but only a partial exemption for journalists and photographers. A hearing for a preliminary injunction is scheduled for March 9.
Why it Matters
Many writers affected by AB5 have well-established freelance businesses that are threatened by the law. My situation is different. Over my career, I’ve worked mostly as a full-time editorial employee, but like many writers, I also did some freelancing on the side. After I was laid off, I was faced with the prospect of building a freelance business from scratch. This generally involves securing a number of “anchor clients” who can offer a steady stream of assignments, but with its 35-submission limit, AB5 was deliberately crafted to discourage that kind of work.
Some people become freelancers because they like the freedom to work at home, to set their own hours, and to choose their assignments. They also get to deduct business expenses, and if a publisher goes out of business, they can rely on other clients to replace that work.
Others become freelancers out of necessity. These include stay-at-home parents, people with disabilities, and older folks like me who face age discrimination. In my case, I’ve applied for dozens of jobs since being laid off, and I’ve had just a couple of preliminary interviews to show for it. Much of the work for Bay Area journalists involves content marketing for tech companies. The tech industry is notorious for age discrimination, and my lack of marketing experience is an additional hindrance.
AB5 didn’t just affect journalists. It has disrupted the lives of many other folks: Photographers, videographers, interpreters, musicians, dancers, healthcare professionals, and more. It’s also having an impact on cultural organizations in the state. A volunteer-run opera company in Alameda canceled its only 2020 production due to AB5. The executive director of San Jose Jazz wrote about the complications posed for his group, which produces a large jazz festival and sponsors educational programs.
The Politics of AB5
AB5 passed the legislature with near-unanimous support from Democrats and united opposition from Republicans. It has strong support from organized labor and is generally opposed by business groups. Its author, Assembly member Lorena Gonzalez, was previously head of the AFL-CIO in San Diego and Imperial counties.
Republicans have been making hay with the bill, describing it as an example of government overreach. However, among everyday Californians, opposition cuts across party and ideological lines. Like many freelancers, I’m a liberal Democrat. In fact, in my younger years, I was a Democratic Party organizer, including a stint as chair of the Santa Barbara County Democratic Central Committee (1984-86). I have tended to identify with the progressive wing of the party. But I am deeply disappointed that my party has pushed this legislation.
The supporters of AB5 claim that it’s needed to prevent exploitation of workers who have been misclassified as contractors. But it is clear that it’s the proverbial cure that’s worse than the disease, like a cancer drug that can’t distinguish between healthy cells and malignancies.
Updates: The Spawn of AB5
California is said to be a trendsetter, and now legislators in other states, and the U.S. Congress, are considering similar legislation. Bills incorporating the ABC test have been proposed in New Jersey, New York, Illinois, and other states. In Congress, the ABC test is a component of HR 842, also known as the PRO Act, a broad package of changes to U.S. labor code that is being heavily promoted by organized labor.
Proponents say it applies only to union organizing and collective bargaining. But it’s the first in a multi-pronged effort to impose the ABC test in all employment, labor, and tax law. In Sept. 2020, two Senators and one House member introduced the Worker Flexibility and Small Business Protection Act, which would essentially be a national version of AB5. But unlike AB5, it does not include exemptions.
That same month, the California legislature passed AB2257, which broadened the exemptions in AB5 and removed the 35-submission cap for freelance journalists. But now the proposed federal legislation could take that all away.
You can learn more about AB5 and similar laws by following the links below. I’ve also set up a store on CafePress to sell anti-AB5 merchandise, including T-shirts, buttons, and posters.
Fight for Freelancers NJ (this group is battling similar legislation in New Jersey).
How AB5 has instilled fear and confusion in California’s arts community (Los Angeles Times)
“Everybody Is Freaking Out”: Freelance Writers Scramble to Make Sense of New California Law (The Hollywood Reporter)
Laws to protect Uber drivers could put freelance journalists out of business (The Washington Post)