California’s Assembly Bill 5 came for me today | Hacker News Reader

California’s Assembly Bill 5 came for me today

mavsmoneyball.com

83 pointspgrote138 comments

The effects of this law are complicated -- I can't say that it's clearly a net boon or a net fail to me.

While I sincerely empathize with Lawson here, I can name off the top of my head a dozen restaurants, several grocery stores, and a handful of B2C startups in the Bay Area that have historically misclassifed most of their cooks, dishwashers, waiters, cashiers, stockers, warehouse, and shipping & receiving staff as independent contractors. Many of those misclassified employees would rather[0] be employees with basic protections such as overtime pay + some degree of protection in the event that they are injured while working.

At the same time, I know of some folks who are completely out of work as a result.

[0] I know because I asked some of them, and was one of them in a past life

Every worker should have those basic protections. There are some people who are fortunate like this writer to have a real job and do not need their part-time gig. But there are way more people who could benefit from those protections.

I'm a software engineer so I'm already pretty fortunate. Should we change laws so that we somehow hire more engrs, maybe pay less employment taxes or some such thing? Probably not. And there are plenty of people even in software engineering who lose their jobs and can't find another one for whatever reason, they'd benefit from stronger workplace protections. Workplace protections are a good idea, just like higher minimum wages; it's because raising the minimum bar is better because it helps those at the bottom.

Even if a privileged person could take on a part-time passion project and now they can't.

I hear what you're saying, particularly about the author and her passion project. But there are some folks who aren't privileged by any stretch of the imagination who are probably going to experience some income loss or instability as legislation like this become more common. See [1] for an example, and also consider the situation for undocumented workers.

So it's complicated! This will probably be a good thing for most workers, but it'll likely have nasty side effects when it comes to the most marginalized and vulnerable workers

[1] https://www.sfexaminer.com/news/new-rules-for-contractors-ha...

> Every worker should have those basic protections.

So why tie them to a job? Why force people to work full time for a single employer to enjoy them? Why not do like most countries and guarantee these protections for everyone instead?

I'd support this not be tied to jobs. but in the us, reality is that currently many things like health insurance are unfortunately tied to jobs.

That new law makes it impossible for us to continue with our current California team site structure because it restricts contractors from producing more than 35 written content “submissions” per year.

(From a link found in her first paragraph: https://www.sbnation.com/2019/12/16/21024100/thank-you-calif...)

A lot of writers do it part-time, have other sources of income, have medical coverage and the like via other paths and do contract writing by choice because it makes sense for them.

This law seems to be throwing the baby out with the bath water.

/2 cents from someone who does writing as a 1099 worker. Thankfully, this doesn't impact me because I no longer live in California.

Anybody else think it's interesting that this article is so focused on AB5 - and almost completely ignoring her employer's responsibility in this.

What's blocking her from being hired in a properly classified position on a part time basis?

What makes you think anything is blocking her? The article makes it sound like she just doesn't want to be hired as an employee. The company's original post (https://www.sbnation.com/2019/12/16/21024100/thank-you-calif...) encourages everyone to apply for roles in their new org structure.

Because companies complain that it adds 20% - 30% to their labor costs.

Not to mention employee labor and liability is basically a personal guarantee for a business owner.

Hard to justify committing to wages if your business is new or volatile.

Easier to just not start a business. California has great programs to help the poor with food, clothing, and energy. At some point it becomes easier to just stop working and live off the state.

Then you vote for the party that will let you keep your free stuff.

Then you have a land where costs are high and the people are mostly poor. You have California in 2019.

https://www.politifact.com/california/statements/2017/jan/20...

States without a good social safety net do not do better in terms of new businesses. Frequently the opposite - not having an educated workforce, infrastructure, or any amount of established industry keep the bottom states at the bottom. If they did do better at starting businesses, many of us would be moving there.

More accurately, the loophole they've been using to obtain a labor discount (employee misclassification) has been removed.

There is no loophole, and there is no labor discount. This is inaccurate.

You are speaking of the Employer portion of social security tax (aka Self Employment Tax).

All the happens when switching from contractor to employee is the salary goes down, so the final cost to the employer is identical. (And the income of the employee is also identical.)

A contractor vs employee is about flexibility on hours. An employee expects a certain number of hours per year - all the benefits are based on that.

A contractor has no such expectation, so they have no benefits (because otherwise you would have to scale the benefits up and down constantly based on actual hours worked).

Going from Contractor to Employee status adds 20% - 30% in labor costs. Things like Workers Comp, PTO, unemployment insurance, etc. that companies are forced to pay. There is indeed a "loophole" or labor discount with ICs.

That is why contract positions have a far higher payout. I know many contractors who come out on top this way. Many have a spouse with a job that provides Insurance for the family. They pocket that extra. Others just enjoy the autonomy of the hours they work ETC. If restaurants are exploiting workers by calling them contractors, why do the workers stand for it? Go work somewhere else. Why does that restaurant have cooks on staff if they are indeed mistreating them? Are people so weak in this generation that they can't make things happen themselves and need the government to save them?

"Strong men create easy times, easy times produce weak men, weak men cause hard times, hard times produce strong men."

Get ready for hard times...

The government is of the people, so yeah that's how they're making things happen this time. If you have two tools and never use one, then you only have one tool. In America, we have both the ballot box and the market.

The track record of the government saving people and fixing things is absolutely abysmal. It is literally insane (doing the same thing over and over and expecting a different result). Why has the black poverty level been the same for 60 years? Do you know how many laws and programs the government has created to save them? The government doesn't do anything very well. There are always so many unintended consequences that need more laws and programs till there is so much red tape and taxes needed to pay for all the bureaucracy and programs. Government officials campaign on promises of half baked ideas. Then when they get elected, they do their job, making more and more laws and programs. Progressives are even realizing now that the government has created a welfare generation and are pushing to end it in favor of guaranteed basic income. Look at the insane amounts of money sunk into inner-city schools and do things ever improve? No.

The government is a failure for social programs and fixing problems citizens face. This is easily proven though statistics. How do we keep on going down this path? I'll never understand big government people...

That sounds like a talk radio tagline. Real wages have barely improved since the 70s. The safety net has been dismantled. We're in the 3rd world in terms of worker protections.

But toughen up! Don't fight for better pay, go work for someone else and the market will provide!

> adds 20% - 30% in labor costs.

As I said multiple time: In the real world companies simply reduce the salary 20% to 30% in order to keep the final number the same.

I would like to see evidence of these mythical companies that pay based on what's fair and not based on the cheapest amount they think they can get away with, while meeting their own goals

Did you read it in reverse?

Reducing the salary is cheaper for the company. Or more accurately employees and contractors cost them the same, it's just do they pay it as salary or as benefits?

You're implying that there's a set "value" per employee that the companies are going to pay and they merely subtract their costs from employees while contractors are paid more because they lack these fees.

That might be the case for skilled labor that freelances but we've seen a plethora of gig economy jobs be created that trend towards minimum wage or lower. That does not mesh with your claims

Cost is the most obvious one. There is likely no shortage of writers to take the position that aren’t governed by this law.

We used to hire employees in California, and even with letting an external payroll company do everything we were still getting civil rights posters like every week.

Who were they for? Where were they supposed to go in our coworking space? When we let the payroll company go the administrative burden was such a sidequest to our actual mission that it was untenable. To clarify we ended employee status alongside getting rid of the payroll company. 1099 is just simpler and for the federal government's rules the discretion of the people we worked with fit the requirements for contractor status.

So now removing choices for even having employees or not really makes it unattractive for businesses under a certain size.

I think they should consider that.

"Him"? The writer is named Rebecca...

And thus the unintended but extremely predictable side effects start.

For another perspective, SB Nation's announcement: https://www.sbnation.com/2019/12/16/21024100/thank-you-calif...

Notably, this thread is full of people blaming SB Nation for not converting IC's to employees, which is exactly what they say they're going to do, though not everyone will end up with a job at the end of it.

You're probably right, but I see nothing about them not hiring some people in the announcement. They do say some people will probably not want to leave their current jobs. They also say everyone will get some amount of money for notice. Sounds overall pretty good of them, if they actually do it

I'm guessing we'll see more stories like this as the compliance departments of companies realize their new found liabilities. Especially once the lawyers start pumping out ads. I'm wondering how freelance networks such as Upwork, Fiverr, Toptal, and YC's own Gigster are going to react.

Correct me if I am wrong but freelancing sites like Upwork, Fiverr, Toptal, and YC's own Gigster won't be affected. The sites only setup contractors with businesses on a project by project basis and meant to be temporary from the outset.

This is meant to target companies that provide the services directly, hire people to work non-stop for them and in the same field/line of work or industry as the business.

Also many freelancers already have LLCs or business so this is business level contracting corp to corp on these sites.

Places like Uber/Lyft might also be able to argue they are a matchup service between drivers and passengers/travelers but it will probably change some payment aspects.

Companies that provide food, cleaning, or services like janitorial and others that cheap out by making workers contractors are probably the biggest offenders of having people employed for years, providing that service, and cheaping out on contractor labor instead of employment.

There will probably be lots of loopholes found as well over time, primarily when becoming a business rather than an individual working for these types of businesses.

Barring the exemptions on certain industries/salary thresholds, I don't see how what these businesses do is fundamentally different than say, uber connecting you to a driver. They're distributed consultant firms, I could see an argument for Upwork et al needing to classify their freelancers as employees and cover benefits if they fit the criteria.

Main difference is that you negotiate contracts at Upwork, you don't do that in Uber. I still think that Uber should't count as employees, but that is the argument I see the proponents give.

> Correct me if I am wrong but freelancing sites like Upwork, Fiverr, Toptal, and YC's own Gigster won't be affected. The sites only setup contractors with businesses on a project by project basis and meant to be temporary from the outset.

This is incorrect. These companies do not simply set up contracts between companies and walk away and they aren't necessarily project based (especially for Upwork and Toptal). Nor are the contracts necessarily short term (some go on for years). These companies collect payments on behalf of the freelancers that work underneath them and some take an undisclosed percentage or added cut on top. I'm a member of Upwork, Toptal and Gigster, so I'm basing this off my actual experience.

Reviewing AB5's ABC test, I see nothing that prevents these companies from failing at least one if not all the provisions (you need to be compliant in all 3):

1. the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact

2. the worker performs work that is outside the usual course of the hiring entity's business

3. the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity

> Also many freelancers already have LLCs or business so this is business level contracting corp to corp on these sites.

This is not necessarily the case. I definitely didn't have an LLC when I started freelancing. It costs $800/year in California and doesn't offer much benefit to a freelancer.

Edit: It looks like in the case of Upwork, they're using the "professional services" exemption from AB5 and offering to W2 workers like a staffing agency:

> And if you look at the text of the law there's various mentions about -- around professional services being excluded. So that's one component of it. The second component of it is the fact that we actually also are payrolling services. So we would -- we call it freelancing but some of the work in Upwork is under a 1099 some of the work on Upwork is done through a W-2. Through our product offering we have called Upwork Payroll.

https://www.fool.com/earnings/call-transcripts/2019/11/07/up...

Looks like this really won't affect software freelancing for engineering and creative services.

AB5 wouldn't affect services like these under the "Professionals" or "Professional Services" label. [1][2]

Software contracting is largely excluded especially freelance. Even if you needed to get an LLC you could get an out of state LLC for cheaper LLC if $800 in CA is too much, usually around $400-$800 when all setup fees are put in.

AB5 is largely a moot point for software/creative services beyond writing more than 35 articles a year.

Under the ABC test, a worker is presumed to be an employee unless the company proves that the worker:[2]

(A) Is free from the control and direction of the company in performing work, both practically and in the contractual agreement between the parties; and

(B) Performs work that is outside the usual course of the company’s business; and

(C) Is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company.

If there was ever any issues with (C) which would be the only possible conflict, software/product/creative/engineers can get LLCs to to corp to corp contracting.

AB5 exemptions:

- Doctors (physicians, surgeons, dentists, podiatrists, veterinarians, psychologists)

- Professionals (lawyers, architects, engineers)

- Professional services (marketing, human resources administrator, travel agents, graphic designers, grant writers, fine artist)

- Financial services (accountants, securities broker-dealers, investment advisors)

- Insurance brokers

- Real estate agents

- Direct sales (if compensation is based on actual sales and not wholesale purchases or referrals)

- Builders and contractors

- Freelance writers and photographers (if contributes no more than 35 submissions to an outlet in a year)

- Hair stylists and barbers (if licensed and if can set own rates and schedule)

- Estheticians, electrologists, and manicurists (if licensed)

- Tutors (that teach their own curriculum, and that are not public school tutors)

- Commercial fishermen

- AAA-affiliated tow truck drivers

AB5 covers:

- Health care professionals (occupational therapists, speech therapists, optometrists, nurse practitioners, physician assistants, radiation therapists, licensed professional clinical counselors, marriage and family therapists, licensed clinical social workers, respiratory therapists, audiologists)

- Rideshare, delivery service workers, and other gig economy workers

- Truck drivers

- Janitors & housekeepers

- Health aides

- Performers and other entertainment professionals

- Land surveyors, landscape architects, and geologists

- Campaign workers

- Language interpreters

- Exotic dancers

- Rabbis and other clergy

[1] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

[2] https://www.dwt.com/blogs/employment-labor-and-benefits/2019...

Unfortunately software engineering is not considered a "professional service" according to the final text in AB5. I'm not sure where you're seeing an exemption for software engineers in either of your linked resources. "Engineers" aren't software engineers if that's what you thought it was (see the part where a license is required).

Consider yourself collateral damage- just like full-time employees were when companies decided to hire ICs and not pay them benefits.

The real problem unfortunately lies in the fact that the Govt decided the best way to provide people benefits was through the employer.

While I was a student, I was employed, part-time, as a contractor doing software development. It was incredibly beneficial; my employer was very flexible and I worked as I had time. This paid a significant portion of my college expenses and gave me invaluable work experience without which I would not be where I am today. I would have a worse job and more debt. This California law is ridiculous. Under it, I could not hold such a position. It is not the place of the state to dictate the terms of a private contract between two consenting parties.

AB5 wouldn't affect you under the "Professionals" or "Professional Services" label. [1][2]

Software contracting is largely excluded especially freelance.

The employer would just have to follow the AB test which is beneficial to contractors:

Under the ABC test, a worker is presumed to be an employee unless the company proves that the worker:

(A) Is free from the control and direction of the company in performing work, both practically and in the contractual agreement between the parties; and

(B) Performs work that is outside the usual course of the company’s business; and

(C) Is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company.

If there was ever any issues with (C) which would be the only possible conflict, software/product/creative/engineers can get LLCs to to corp to corp contracting.

[1] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

[2] https://www.dwt.com/blogs/employment-labor-and-benefits/2019...

Your assumptions are incorrect; I have already showed why I wouldn't have been able to work in a prior comment: https://news.ycombinator.com/item?id=21810451

You're wrong that the "ABC" test is beneficial to contractors. I was doing software development for a software development company, so I wouldn't have passed B. As you have already agreed, I'd have failed C. Finally, I may or may not have met A.

Your response to this is, "get an LLC?" You think gig economy workers and high schoolers are capable of this? As you said, that's fine for professionals with those kinds of resources and expertise (or the money for a lawyer). It's also different paperwork for the company. Showing that the best solution is to bypass the law via a loophole also doesn't exactly extol it's virtues.

"Professional Services" and "Professionals" are exempt which includes engineers/software development. See here (https://news.ycombinator.com/item?id=21811997), engineers are AB5 exempt by law.

Also, most freelancing software engineers and developers have their own LLC before they even begin. Asking a software engineer to make an LLC is easy, a bunch of food workers may not have the funds. I know almost zero developers that are contractors or freelancers that don't have their own LLC (usually single owner).

I am a software engineer/developer and game developer that contracts and this doesn't affect me at all.

I am very happy for food, cleaning, healthcare workers that will get more protections now.

California is the last state doing anything for labor and workers. No need to pile it on labor/workers more when you have only one state out there fighting for lower/middle class to get better employment.

I'll quote the reply to the comment which you linked:

"Unfortunately software engineering is not considered a "professional service" according to the final text in AB5. I'm not sure where you're seeing an exemption for software engineers in either of your linked resources. "Engineers" aren't software engineers if that's what you thought it was (see the part where a license is required)."

It covers _licensed_ professionals, which would not have been me. I didn't even have a formal education. The only sub-specialty I could potentially see is a security professional with certifications, but that would probably only apply to, say, situations working on FIPS compliance audit.

Not sure I agree but if you are right, the software engineering job (which you can get a degree for which would be a certification or even a software cert like MCSD or similar) would mostly depend on the job at hand.

If it was for any company/client that their main focus isn't software contracting then if would be fine according to the not the same field rule.

If it was for a software company already, that contracted out then maybe but probably not for a few reasons: Contracts are usually project based or short term anyways (in hiring case contract to hire) and contractors usually have multiple clients and change frequently which would also fall into the non-long term exemption.

Finally, again, if you have a degree, one certification (even MCSD or other) or you have an LLC, which every contractor/freelancer should have anyways, then you would be fine.

I think you are trying really hard to make this affect software engineers/developers or other developer fields when it would easily be avoidable.

The law was meant to target California companies abusing industry like food service, cleaning services, healthcare services where companies are clearly abusing workers and workers would rather be employed further.

Most software contractors do not want to be full/part time and enjoy their freedom of setting their hours and picking and choosing clients.

The only software field companies this would affect would be companies that force their developers to be in the office, between certain times, that sell software development services and have these workers for long term periods of time. Basically those situations the software developer probably does want to be employed so again not really an issue.

Why does this prevent that experience from happening? That's a genuine question, as I perhaps/probably don't know enough about the law to get it.

Was this a work study program or internship through your college? Or did you just take a contracting position at a company to help make ends meet?

I held some un-paid internships in middle school and early high school. Learned programming, took software engineering classes, and proved merit w/un-paid internships because hiring a kid is risky. Late HS and college had contracting positions to make ends meet (esp. in college, they took a big chunk out of tuition).

I'm not sure what this law would change about being able to work part time with flexible hours. Could you elaborate?

Sure. The new bill establishes that an employer must demonstrate the following requirements to hire someone as a contractor (quoting from the bill):

* the person is free from the control and direction of the hiring entity in connection with the performance of the work

* the person performs work that is outside the usual course of the hiring entity’s business

* the person is customarily engaged in an independently established trade, occupation, or business

I wouldn't have been even close to meeting those. I had some freedom about how the work was performed, so number one is a maybe. I was doing software development for a software development company, so numbers two and three are hard "no"s. As a college student, I didn't care about insurance, or vacation time, or being a full employee. I came to a mutually-beneficial agreement with my employer, and this bill would have prevented that.

Also of note: California bans un-paid internships in the "free labor" sense. While this sounds good on the surface, it's not. I held internships in middle and high school that were awesome experience when I had time to burn, and those proved incredibly helpful in landing later paid internships, contract work, college acceptances, and salaried jobs. They were incredibly helpful, and I learned a ton, but I couldn't have done that were I a resident of California.

This bill is written to target the gig economy. Many college students I know pay make good money doing gig economy work. And many working-class teens I know who typically work fast food can now use gig economy shifts to fill in when they can't get shifts lined up working fast food or other typical jobs. This bill is awful for almost everyone, because it removes opportunities without providing alternative ones. The state does a great job of taking them away, and a comparatively-horrible job of creating them. Were I a teen-age Californian high-schooler, I'd now be looking at working fast food rather than software development.

I guess my question is more, "Why can they not just hire you as a part time employee with a flexible schedule?" Not, "Why can they not continue to do what they previously did?"

Does AB5 apply to independent contractors living in California or businesses based out of California (or both)?

Both

Why is the Editor-in-Chief being classified as an independent contractor?

Probably because they do piece work on their own time with flexible hours and no set schedule?

Plenty of people who are employees have flexible hours and no set schedules.

This is SB Nation, they have >100 separate sites (one per sports team in the leagues they cover, plus some extras), and they each have an "editor-in-chief" which is specific to that site and manages that community. It's not always their day job, as in this case it isn't.

Part time employees can work 5 hours a week. That’s got nothing to do with the employe vs contractor decide. Unless your ‘contractors’ are doing the same thing for multiple clients over the year, their probably employees.

If in doubt: https://www.oregon.gov/ODA/shared/Documents/Publications/Nat...

I’m not an AB 5 expert so don’t know what the qualifications are nor the exemptions but piece work is a classic marker of IC work.

I don’t know that I’m for that but it’s common enough that changing it would of course cause strife.

(deleted)

Yeah changed to gender neutral pronouns as I should have written it in the first place. Thanks.

Because that's what he would prefer.

I guess I'm a bit behind the conversation here but what exactly are the obligations the reclassifying contractors as employees would place on employers that are apparently impossible for SB Nation to fulfill?

It removes a mechanism that allows companies to exploit workers by treating them like employees, but considering them legally as ICs (no Workman's Comp, at-will, etc.) and giving them a 1099 form at the end of the year.

Ultimately we're forcing a bunch of societal burden onto employers. So you end up with a bunch of admin overhead at the employer to manage all of these additional requirements and maintain all of the admin burden at the regulators to ensure that they are doing their job.

Wouldn't it be better to just tax companies for 1099 like you do unemployment tax and pivot that over to a state-managed healthcare and retirement benefit that 1099's could opt in to for some reasonably low cost?

"Ultimately we're forcing a bunch of societal burden onto employers."

How so?

Because the US is shockingly sucktastic wrt health care for it's people. Most wealthy, developed nations provide good health care to its citizens via the government. The US provides health care as a benefit of full-time employee status. Contractor, part-time employees, unemployed people, homemakers and others often get screwed in this deal, which is likely part of why California is saying "You can't call these people contractors anymore."

National health care would resolve a lot of issues that get darkly joked about a la "The third world country of America."

I don't disagree that our healthcare system is a joke. But working full-time for a company in no way, shape or form guarantees that you'll get health benefits too. AB5 also doesn't force employers to provide healthcare.

That doesn't mean the general climate in the US, shaped as it is by our health care policies, didn't help foster the creation of this bill.

Policy and law isn't always rational, well-informed and wise. All too often, it's what you can get most everyone to agree on based on shared assumptions and biases.

I thought ACA fixed that? (As in requiring employers to give some healthcare, even if a horrible one)

The author of the article wouldn’t be a full time employee anyway, so I don’t see why this is such a hardship for SB Nation.

I'm surprised why hating on America is fashionable in HN. If this hatred was directed against countries like France or Germany it would be immediately shut down as "nationalist flamewar."

I'd also like to point out that the US has a higher GDP per capita than most European countries and more Europeans immigrate to the US than the reverse. If US is as bad as you say then why does that happen?

USA is rich at the moment since the dollar is extremely strong, its GDP per capita wouldn't look so good if it went down to 2009 levels again.

USA is an attractive emigration target since it is the biggest country which speaks the lingua franca, you see all English speaking countries enjoying similar advantages. This also naturally helps with university prestige and startup success.

But this person is losing her "passion project", so it must not be worth the intended consequences. (/s)

In California at least, pretty much all employees are at-will. Workman's comp I guess is a thing though - is it really that expensive?

Looked it up, for a writer it would probably be like 1% of payroll.

Please explain how they are being exploited? What exactly do they lose?

And in your reply don't forget that if they converted to employees their base salary would be lower.

You keep saying that converting from IC to employee would mean their base salary would be lower. Have you ever been an Independent Contractor? This simply isn't true.

Yes I have, and yes it would be lower. There's even a conversion formula companies use.

Basically take the extra social security tax they have to pay, and subtract that from salary (adjust a bit since the lower salary also lowers the tax).

If they cover health insurance then subtract that as well.

> This simply isn't true.

It's lovely hearing that something I've actually experienced is not true.

I switched from contractor with flexible hours, to employee full time (with the same company), and my take home was lower as an employee, but then again I got health insurance.

If I had to do it again I would have stayed a contractor: I made more money, and I could shop around for better health insurance.

The company might have said no and/or given me fewer hours, so I guess that's a negotiation I would have done.

Of course in California the choice would be taken away from me.

I've been a self-employed IC with numerous large clients and I currently work for a company that I'm an actual employee, but my company contracts me out to another company. I've done this for over 15 years and none of what you're describing has been my experience.

Did you even negotiate the transition or did you just accept what your company told you? How often have you gone through this?

Well, first of all they'd have some obligation to ascertain that, and that alone won't come cheap. Effectively, Rebecca was likely more productive than the law allows, so they would need to provide her with ridiculously outsized benefits even though she is clearly a genuine independent contractor, and it's likely that other contributors were also too productive for the law. Though, and this bears repeating, even figuring that out is going to be very expensive.

Paying for health insurance, unemployment insurance and a host of other fees required of businesses for employees that aren't required for contractors.

I think those only kick in if the number of employees is large enough.

The article doesn't mention that detail so you may be right.

SB Nation is run by Vox Media.

Pretty sure those requirements only apply to full time employees.

Exactly. But you don't list the actual problem:

Those benefits are based on working certain number of hours (because the benefits are fixed, they can not adjust them up and down based on hours worked).

So basically what this law does is prevent people or employers from having flexibility in hours.

You keep stating things that aren't true.

Salaried employees negotiate and get benefits and isn't tied to "hours worked".

There are lots of jobs now listing flexible hours as a benefit.

I believe the poster you are replying to is referring to number of hours worked. Are you referring to when the hours are worked? There's a difference between 100 hours one month and 20 hours another month versus 8 hour block per day and four 2 hour blocks per day.

Even if you fall afoul of the AB5, all this does is move the burden of proof to the employing company that the people employed are independent contractors. If your people are all happy being independent contractors, you're probably going to be okay.

The fact that SB Nation would rather fire all these people rather than even attempt to comply simply tells me how much value SB Nation places on them.

No, it does more than simply move the burden of proof. Writing articles for a media site is always going to fail the ABC test; it's clearly "integral to the company’s business", no matter how strongly the writers look like independent contractors in other ways.

What if you're just publishing a few articles a month?

There will be some unintended consequences of this law, and I am pretty sure the legislature will adjust and evolve. But I find it weird that there are businesses who just wants to get way by outsourcing the core part of the business to contractors. What is the point of employment law then ? Supercuts is one big example of that (and they got an exemption from AB 5).

Could these people just form an LLC to get around this? So you'd be acting as a business not an individual.

That's exactly what they have to do and some are. However, forming and running an LLC can have it's own headaches depending on the type of business you're running. In some industries, running as an LLC would cost you more than you'd make as an IC.

What industries does an LLC cost that much to run in?

I've had one for years, it costs less than $250 annual to actually maintain the LLC.

In CA LLCs have to pay a minimum state tax of $800, plus some misc. other fees depending on location.

In California, the state where this law applies, they start at $800/year and go up from there.

Piece work that doesn’t pay well. The tax complexity alone likely blows an SB Nation writers pay out of the water.

> Tax complexity

As in Schedule C, on a standard tax form? Most online tax software can handle basic LLC income.

Taxes only get complicated when you want to optimize the amount you owe. Depreciating assets, hiring, firing, claiming losses, etc.

I would assume certain industries require special permitting or licensing for LLCs.

Seems that the option of running as an IC is going to disappear for many, no?

There are few exceptions to the new law, and even the exceptions have to pass the Borello Test.

They could.

But for many things, it's just easier for everybody to just not deal with California.

"...not work with California-based independent contractors ... I don’t blame them at all."

Wait a minute. Yes, blame them. This is a stance against paying benefits and sustainable wages for employees.

Meet globlization. This is the issue.

Some more discussion on alternatives they excluded would help. Like, what about part-time employment?

Here we go. A law meant to protect employees is going to lead to more unemployment. You see it with SF wait staff laws and now more and more places either don't hire wait staff or don't hire as many as they used to.

The state is off its rocker yet again

The real problem is that California should clearly have just added these guys to the exclusion list (which is already pretty massive) considering there's such a large fungible labour force in this market.

Were contractors covered by the Vox Media Union?

You can’t have employees in everything but name only. This this guy cheers on being a second class citizen in the labor world doesn’t help all the people with absolutely no job security, making worse pay and benefits for someone with connections to take 30-60% off the top of their work.

Those people also aren’t helped by having their employment taken away by this legislation.

I have a friend with health issues that mean that he’s only able to work some of the time, and can’t predict when. Gig economy jobs are the first time that he’s been able to earn any income beyond his disability check. I hope this bill that tries to enforce the “normal” full-time employment relationship doesn’t deprive him of that.

I agree that people in that situation should be able to work some of the time. Just the same as teenagers, part time workers and legit "extra income" people. This is always the argument against, say, raising the minimum wage, or providing more workplace protections.

Its a lie - you can absolutely fix this situation. No law is gonna be perfect, but having a situation where the "main" job provides actual days off and health insurance is a good thing. If disability is the main job, and you get benefits through that, nothing should stop you from doing part time.

But, you shouldn't allow your friend who already gets a disability check to dictate that everyone being abused by a second class labor system shouldn't have rights too. I would RATHER your friend who is already taken care of lose their gig economy job if people who have to work 3 jobs instead only have to work 2. I'm sorry, thats better overall for society, to me. You can argue the tradeoffs, and maybe have people on disability be able to work 20 irregular hours without losing disability. But you're depriving people of time off to be sick, time to be with their families, and health insurance so your friend can get slightly more self-actualized while he's actively getting a check every month? I'm being somewhat trite here but, in my mind its not even a comparison.

My problem with policies that require employers to give benefits to part time workers is that they massively increase the marginal cost of labor. There should be a smooth curve relating hours worked to compensation provided. Increasing the minimum wage raises the entire curve, preserving a uniform relationship. Benefits for gig workers radically distorts the curve, which will probably cause a bunch of economic activity to cease entirely. This seems likely to harm everyone involved (laborers, consumers).

I claim it’s good for society that Uber can pay otherwise idle workers to use their otherwise idle cars to drive drunk people home when the bars close, even if that activity is only profitable for 10 hours a week.

The right way for the government to provide benefits is for it to provide benefits, not to shoehorn those benefits into an unrelated labor market transaction.

I agree entirely. It’s pro business to not foist necessities like healthcare on business owners. Unfortunately we have a patriarchal semi-feudal system where the most well off are expected to dole out benefits as the market demands or they can manipulate the market to not demand.

This person already has a full time job.

Many of the freelancers impacted by this bill do not have a full time job, and this bill won’t give them that, it will just take what they have away.

It would have been met with less scepticism and maybe some genuine concern if one of those "many" had written the article instead.

People affected by this bill are all over Twitter talking about it. Where is your skepticism? You don’t believe that there are freelancers in California that don’t have full-time jobs?

"This guy" is not a guy.

I totally get and understand being scared at losing part of one's income, especially in place like California, but I agree with you. This is a step in the right direction and removes the ability for companies to continue to exploit 1099s.

Being downvoted for having an opinion? Good god people.

Complex systems are, in fact, complex.

California does not recognize non-competes [1][2]. California is also a nebula of innovation and great companies because of it, with creator/developer freedom.

California will do things for labor other states won't, like not allowing non-competes and AB5. Will there be some situations that aren't ideal? Sure. Will it ultimately help more people not get taken advantage of in the labor market who need it most? Yes indeed.

The 'editor-in-chief' as a contractor seems like stretch reason to get offended by AB5. They could easily be a part-time employee, deny all benefits and nothing would change. But AB5 helps the people that don't have the flexibility of OP.

> California AB5 'came for me today'

> As with many of my colleagues today, because I live in California, I was just told that I can no longer hold a paid position with SB Nation. This means that I will be forced to step down as Editor-in-Chief of Mavs Moneyball as of March 31

> For those who don’t know, California’s legislature recently passed a law, Assembly Bill 5, codifying a California Supreme Court decision that classifies many independent contractors as full-time employees. While there is a small carve-out in the statute that allows for paid writers or editors to continue to produce a very limited amount of content per company, it’s not nearly enough, and it would be hard for me or most of my colleagues to fit in that small box.

The OP makes it sounds like California kicked in the door and ripped their keyboard from their hand and never allowing them to work for the publisher. She can easily be part-time, start a business for it and contract, as an 'editor-in-chief' you'd think that is more involved. With the limit of 30 articles a month is about 3 per month and that is per company, other writers that write for many publishers will be fully fine with this. I doubt most writers that write more than 3 articles a month would mind if they got extra protections, the editor-in-chief is a different thing entirely.

I can understand why businesses are mad about this but not labor or contractors. California makes it easier for contractors to work by not allowing non-competes [1][2].

Non-competes are the most anti-American, anti-business, anti-innovation, anti-labor things in America. Support California taking a stand against the powerful and authoritarians that want essential slaves in the worst form of this.

I have no doubt that SCOTUS will eventually have to deal with non-competes. With how a conservative leaning SCOTUS sided on the favor of business with arbitration, and denying access to the legal system for many, it doesn't look good [3]. Having California as an example of a non-compete state is great to have in that it is innovative and contractors don't have to deal with that in California. I have to fight non-competes in every project that isn't based in California. Lots of these companies want developers to sign a 2-year non-compete for a 3-6 month project which is completely asinine.

California ultimately does more for workers and low/middle class than any other state as well as business being a competitive and innovative magnet. With a market this large they are using their leverage for good. But there will always be the haters and FUD from big business and occasionally some that disagree. Ultimately these policies are better for America and labor.

[1] https://www.upcounsel.com/non-compete-california

[2] https://en.wikipedia.org/wiki/Non-compete_clause#California

[3] https://www.cnbc.com/2019/04/24/scotus-conservatives-limit-c...

Just in reply to your point about "editor-in-chief", sbnation's thing is that every sports team gets their own "publication" that covers them, with their own "editor-in-chief". They have more than 500 of them.

Working with the definition of a level levels.fyi was talking about here earlier today, an sbnation editor-in-chief that wanted to be hired by another media outlet might enter at the bottom rung or close to it.

> California does not recognize non-competes

This has nothing to do with non-competes

> The OP makes it sounds like California kicked in the door and ripped his keyboard from his hand and never allowing him to work for the publisher. He can easily be part-time

The author is a woman.

Oops corrected, I did assume because of sports. Should have looked at the byline.

> Will it ultimately help more people not get taken advantage of in the labor market who need it most? Yes indeed.

No it won't. Who exactly will it help? Converting someone to an employee doesn't magically change their income.

To make up for extra benefits an employee receives, their base salary is lower. The final total is unchanged.

The only difference is now there is a lack of flexibility: An employee needs a certain number of hours, all the benefits are based on it.

But if either party needs flexibility, well, now they are stuck. They can't offer benefits because they don't know how many hours, but they can't make them employees because they have to give benefits.

This law only has downsides. It will help exactly no one.

What laws exist that say an employer has to provide benefits for their employees? A lot of employers offer flexible schedules and a flex schedule can be negotiated during the hiring process.

> No it won't. Who exactly will it help? Converting someone to an employee doesn't magically change their income.

Contractors will be helped in many fields and industries. Outside of writing and development/technology, most contractors are messed with and not given their fair shake. This will change that.

> The only difference is now there is a lack of flexibility: An employee needs a certain number of hours, all the benefits are based on it.

If it is too tight laws can be adjusted. The point is it will help more that it will hurt.

You can still be a contractor in California that doesn't have to sign a non-compete, which is worth more than anything to a contractor.

> This law only has downsides. It will help exactly no one.

Are you speaking from a contractor viewpoint or business? The contractor/labor/worker viewpoint greatly is improved with leverage.

Companies have to be more careful with contractor classifications for people that don't want it.

If someone wants to work part-time and deny all benefits that is fine. Yes there are things like insurance and more paperwork but you don't think people will innovate and create products to make that easy in California. This is an opportunity.

This is California, without non-competes, where competition and innovation happens, and there is still some leverage on the labor/worker side of the equation. Big businesses hate that so California is incessantly attacked by corporate and authoritarian powers that be. America still has one state fighting for labor, California.

"California’s legislature recently passed a law, Assembly Bill 5, codifying a California Supreme Court decision that classifies many independent contractors as full-time employees" . . .

is that a giant sucking sound I hear as scores of independent businesses are forced to leave California because they can no longer endure the punishment of California government forcing more taxes and regulations on them ?

In effect, classifying more and more independent contractors as employees as just a "backdoor parlor trick" for government to collect more employment taxes . . .

I don't know California employment law and I don't know the specifics of AB5, but I have some experience with "backdoor parlor tricks." They are most often used by corporations looking to dodge various obligations. I have seen big tech companies outsource entire departments of their operation in a way that some schmo shows up to the same company every day and gets their marching orders from an employee of that company. They do this for years. But they are not employees, or temps. They work for some "contractor" whose only contract is with the company in question.

Why doesn't SB Nation want to treat these "contractors" like employees? I don't care at all for California, but I have a hard time seeing them as the bad guy here. This editor claims many people do so much work for SB Nation that they can't fit into the small box carved out by AB5. Before I get too worked up, I'd ask for a definition of "small box." If you're putting in 30 hours a week for SB Nation, and they are your only contract, it's pretty clear that you are an employee and any other arrangement is a dodge.

> If you're putting in 30 hours a week for SB Nation, and they are your only contract, it's pretty clear that you are an employee and any other arrangement is a dodge.

Why does it matter? Why can’t citizens freely arrange their own working conditions?

Why can’t the editor decide to work for who she wants?

Because she lives in California

Because some poor family is struggling to eat so they send their 14 year old kid to hustle up some income. That kid gets exploited by their employer, but has to accept it because little sister and brother and mom are depending on them.

Substitute 28 year old immigrant mom--or 55 year old grandpa--for 14 year old kid. The story repeats and repeats.

When you're hungry you accept conditions you wouldn't otherwise. You may think this is fine and fitting. But California has decided there are limits to what is fine and fitting. Perhaps they ban child labor below age 12. Perhaps they insist that pregnant mothers can't be forced to lift more than 100kg. Maybe they bar disfigurement as acceptable corporate punishment for mistakes. Maybe they say you can't pay less than $100/hr.

Some of this regulation may seem ridiculous to you. I'm guessing you've never been hungry and exploited. You and I can argue about whether $100/hr is the line between exploitation and entitlement. Should employers really be forced to pay for insurance?

I hope, though, that you understand that most people think that employers do have certain obligations. And whether you believe that or not, the reality is that employers are regulated. So it creates an unlevel playing field when one company recognizes their employees and follows the rules, while another rushes them out the back door into a ditch whenever somebody that looks like a regulator shows up.

I agree that two consenting adults should be able to negotiate terms of employment. I recognize that the power dynamic between parties is not always equitable. That's never been the case for me; perhaps it's never been the case for you. But it is the case for a lot of Californians. And I think that it is reasonable to apply rules to everybody instead of trying to figure out which employers are scummy and which aren't.

I personally think my kid doesn't need to be paid a minimum wage, because I provide their food, roof, bed, insurance, etc. I want them to work for the experience. Nobody is really depending on the paycheck. But perhaps their coworker is depending desperately on that paycheck. We could regulate that only desperate people have to be paid a minimum wage, but that seems pretty unworkable. So, as it stands, my child's employer has to pay them minimum wage even though my child might be willing to negotiate for less.

I'm ok blaming that on California, even though my child doesn't live or work in California.

> In effect, classifying more and more independent contractors as employees as just a "backdoor parlor trick" for government to collect more employment taxes . . .

I'm not sure that matters, contractors still have to pay self-employment taxes.

People have been saying some version of this about California economic policies for as long as I can remember, but the state somehow manages to keep attracting business and residents. First it was high taxes, then it was effectively banning non-competes, then it was raising minimum wages in major cities, now it's redefining contractor classification.

I have to say that personally I don't see this going any differently than the previous times - businesses will continue to do just fine, some workers will get forced out of the state, others will take their places, and the net result will be a continuation of rising inequality [1], but not much else.

[1] https://calmatters.org/california-divide/2019/10/income-ineq...

At some point, the poor camel's back is going to give out and one of these thousand cuts is going to kill the golden goose. This is probably not the one, but piling up misguided policies decade after decade is destroying a state that should be a utopia.

And yet California is the 6th largest economy of the world and growing.

And after purging most of the Republicans from the Assembly somehow hasn't had any budget issues. Imagine that.

So, I'm still waiting for that inevitable exodus of Republicans from California so my housing costs will come down. I hear tell that Texas is your utopia. Could y'all hurry up and leave already?

Yet there's enormous homeless problems, with feces and used hypodermics in the streets juxtaposed with trillion dollar tech headquarters. Outbreaks of plague, typhus and cholera. Rolling blackouts because infrastructure has been so poorly maintained. People that make five and six times the nationwide median salary living in their cars or packed in with roommates because the housing market is so broken.

If it wasn't real, nobody would believe it.

There is now record homelessness in California so maybe things aren't going to good.

There is definitely budget issues. California's roads are close to the worst in the US. There are all sorts of issues with dams in the California. It is estimated to be $185 billion - $765 Billion (not sure why estimates are so broad) to fix all the infrastructure in California.

If you add up all the debt by the California government and the various local governments it is over $1 trillion. The debt on pension alone is over $200 billion.

If there are additional people leaving California it will be harder to pay off all the debt and pay for all the infrastructure.

> And after purging most of the Republicans from the Assembly somehow hasn't had any budget issues. Imagine that.

The Republican obstruction was the cause of California's continuing budget issues until the voters passed Proposition 25 which removed the 2/3 super majority requirement to pass a budget.

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