California's new gig economy law could put freelancers out of business
theweek.com
theweek.com
Doing 4 short articles per week wouldn't really fly for a full-time employee the way all these papers and magazines are doing nowadays, where a whole bunch of them already have had to shutdown.
The way this law is written, where the freelancer cut-off is at 35 articles a year, even someone like Boris Johnson wouldn't be able to "knock off an article as a way of relaxation" on a part-time basis. https://www.theguardian.com/politics/2009/jul/13/boris-johns...
The take home pay, and the tax paid is identical.
The article is correct: the law's well intentioned but misguided. If, as a freelancer, I decide to focus on one huge contract with the same company for two years, that should be my decision.
And before anyone says that a c corp is a lot harder to form, it's not really. A little bit extra on legal zoom and that's about it. Additionally, as an LLC, you can elect to file taxes as a C Corp. Which again, absolves the "employer" from needing to file a 1099 at all.
> Naturally, Uber and Lyft have already announced they have no intention of changing how they classify their drivers.
My point.
> big business will always have the resources to shield itself from harms the little guy will suffer
This is a dangerous argument to justify that big corporations are about the law. Luckily for now they still have to submit to the rule of law, even that sometimes is not easy.
The main claim:
> To put that in context, here at The Week I write four columns per week. Were I subject to a 35-article cap, I'd hit my limit here in less than nine weeks. So I'd either have to stop writing for The Week by the end of February or dramatically slow my pace of work to less than one column weekly, cutting my yearly output from about 200 columns to the mandated 35.
Taking the example, what AB25 actually says is that a journalist on a 1099 has a limit of 35 articles per year per pub. To exceed that limit, the journalist does not have to be fulltime. They merely have to be paid on a W2.
afaik AB5 is unfortunately unclear -- though the courts will soon resolve this -- on whether the journalist would have to be paid W2 on articles [36, inf) or whether it would be articles [1, inf), in the case that the journalist write more than 35 articles in a year.
Nonetheless -- and whether you support the law or not -- let's please not discuss it on a foundation of lies.
That's the point here. They cease to become freelancers, which means the company has to pay for many types insurances, benefits and the other half of social security tax. This usually adds about 20-30% of additional overhead on each worker.
That might sound like no big deal and even favorable to the freelancer but that's not what the outcome will be. Businesses don't just reach into their pockets and start paying for these things. They either pass down the 20-30% in losses to the freelancers or just hire full time employees to replace the freelancers.
See for example the effects this type of heavy-handed regulation has had on other "freelancer"-dependent industries:
https://www.sfexaminer.com/news/new-rules-for-contractors-ha...
In other words what the author has said is true: it becomes difficult or near impossible to make a freelance income from CA businesses.
> So I'd either have to stop writing for The Week by the end of February or dramatically slow my pace of work to less than one column weekly
If the company chooses to only use 1099, that's their choice. But they have a W2 option out there.
> * the company has to pay for many types insurances, benefits and the other half of social security tax. This usually adds about 20-30% of additional overhead on each worker.*
That's pure nonsense. If you're not providing health insurance -- which is not required under a threshold of hours per week, and which a freelancer like this is in no danger of hitting -- social security plus medicare are about 8% for the employer. On minimum wages of $12/hour in california, you're paying nothing like 30%. The employer also wouldn't be paying for office space, computers, internet, IT, or treating the employee decently (food, drinks, etc), all of which is rolled up in the typical 25% that employers use as a rule of thumb for overhead. The actual required overhead is minimal.
Now if the employer doesn't want to pay a fully loaded W2 cost of probably under $13.50/hour for CA, that's their choice. But they don't need nonsensical numbers made up to support them.
"instead, they'd hire a few new full-time workers and cut their freelance budget altogether. If I didn't get one of those new jobs — and living outside of major media hubs like New York City and Washington, D.C., makes that likely"