California’s job-killing AB-5 law, which has already shuttered jobs for as many as 1 million state residents, is influencing other states to weaponize similar regulatory laws against independent contractors.
I live in Indiana, and I'm already losing work with major clients. After being commissioned to write a story for Good Housekeeping Magazine, I began working on it — scheduling interviews and sketching an outline. Days later, I received an email informing me that Hearst, the magazine empire that owns Good Housekeeping and 25 other prominent titles, no longer hires writers from the state of Indiana. My first thought was that they had to be mistaken. After consulting with their legal team and the Indiana Speaker’s House, I discovered that Hearst was spooked by Indiana’s version of the lousy labor law California has adopted. Apparently, it's contagious.
The law in question is the ABC Test, which defines whether a person is an independent contractor or an employee. The ABC Test was written back in the 1930s for factory workers; there have since been many evolutions in the economy and the way Americans work, which is why we have the much more modern IRS Test that leaves true independent contractors alone. The ABC test has just three parts, all of which must be satisfied. A is that the contractor controls his own time and working arrangements; B is that she is doing a service that is outside the company’s line of business; and C is that the person regularly performs the same type of service for other businesses.
Specialized professionals have failed to pass B in more than 300 professions identified in California so far. At least 33 states have some sort of ABC Test and the way things are going, companies are going to take notice just as Hearst did with me. The workers in these professions are our nation’s consultants, our subject-matter experts, the people who earn a better living working for themselves because so many companies in their field want to pay for a piece of their valuable time. I couldn’t pass B because, as a writer, I was in the same line of business as the magazine: publishing. Outside of creating a fraudulent out-of-state address for eligibility, I was out of luck as an Indiana resident. I’ve met several others who experienced the same rejection after accepting commissioned pieces at O Magazine and Good Housekeeping.
Already, businesses in ABC-test states face dire consequences for not complying: potentially thousands of dollars in back taxes, penalties, fines and even jail time. Legal departments don’t want to take that risk, so they have simply stopped working with independent contractors from ABC test states. This type of law spooks employers nationwide. If the PRO Act, a federalized version of AB-5 passes into law, there will be no wiggle room.
What we are experiencing in these handful of states is just a bitter taste of what’s to come if Joe Biden wins the White House and the Democrats take control of Congress, and push the PRO Act — which has already passed the House — through. Biden supports this measure, which will force companies to recognize independent contractors as employees eligible for benefits, or to stop working with them altogether, completely eliminating their income overnight. The latter scenario is what has played out since AB-5 went into effect January 1st in California. Given that the federal government says 55 million Americans are doing independent contractor work, Biden is campaigning on a pledge to outlaw millions of people’s income in the middle of an economic recession.
With the COVID-19 pandemic already killing millions of jobs in 2020, Americans need all the flexible working arrangements they can find — and yet, lawmakers are pushing to make it more difficult everywhere with these stifling and needless regulations. Clauses are now showing up in contracts to indemnify companies, and force independent contractors to pay if any government agency determines that the company has misclassified a contractor who the state says should have been an employee instead.
And the union-backed lawmakers pushing these bills will not listen to reason. When California Assemblywoman Lorena Gonzalez, a former AFL-CIO organizer who wears a mask bearing a Teamsters logo on the Assembly floor, was recently confronted by AB-5 victims, she could only yell “F*** Donald Trump” in response. When fellow state assembly member Kevin Kiley tried to show her a petition bearing thousands of signatures demanding a repeal of AB-5, she threw it on the floor. When I attempted to get help from Indiana lawmakers for my predicament, I was told there was nothing they could do for me. The callous indifference from those in charge is insulting at best and heartless at worse.
A report from the American Action Forum found that PRO-Act would create up to $47.3 billion in new, annual costs for employers, and affect up to 54.6 million workers. Behind every pro-worker talking point uttered about the legislation is a Big Labor messenger with visions of dollar signs and a return to the days when unions controlled a large percentage of the US workforce. These laws limit entrepreneurship, freedom and ambition. They stifle business, erase talent and prioritize political special interests over the American spirit of independence and freedom. And they disproportionately harm women and people of color, so much so that Benjamin F. Chavis Jr. penned an op-ed calling AB5 outright “racist.”
Self-employed workers don’t want the government to take care of them — they are caring for themselves by building their own businesses and leveraging the benefits that come with that freedom. I fear for the day when other companies I work for tell me I no longer have a job because they can’t risk the potential fines and penalties that could take them down. I fear for January 2021, when — if Biden is elected — he will make good on his promise to enact the PRO Act and kill my livelihood, along with millions of other careers, in one fell swoop. I’ve sent numerous messages to Biden via Twitter, asking him to wake up and recognize how the PRO Act will hurt families. To date, silence has been the only reply.
If that’s the way of it, then silence may be what he gets back from desperate workers on Election Day.
Ericka Andersen is a freelance writer and the author of "Leaving Cloud 9: The True Story of a Life Resurrected From the Ashes of Poverty, Trauma and Mental Illness." She lives in Indianapolis, Indiana and hosts the "Worth Your Time" podcast.