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Lawmakers in California are scrambling to deal with the fallout of A.B. 5, a law that forced companies to reclassify independent contractors as employees. The law faces legal challenges from the trucking industry, freelance media creators, and classic gig economy companies like Uber, Lyft, and DoorDash. The law went into effect on January 1, and it has unleashed havoc on California’s economy.
Yet former Mayor Pete Buttigieg (D-Church of Social Justice) seems to think the bill is a great idea. In fact, he’s calling for a federal version.
Buttigieg highlighted this policy in a Q&A session on Thursday afternoon. “Misclassifying workers as ‘independent contractors’ is fraud, and it punishes our entire economy. I will empower the Department of Labor to hold employers accountable while expanding protections to 15 million more workers,” Mayor Pete tweeted.
Of course, it is true that misclassifying workers as “independent contractors” is fraud, but the 15 million estimate comes from his policy proposal, to which the candidate linked in his tweet.
Buttigieg unveiled his plan last July, promising that changes in who does and does not count as an independent contractor would expand “rights and protections” for 15 million people. While the plan does not explain how Mayor Pete reached that number, it ostensibly includes contractors working for Uber and Lyft, and likely covers many media freelancers.
California Bill Threatens to Destroy Uber, Lyft, and the Gig Economy
When it comes to the gig economy specifically, Buttigieg endorsed the “ABC” test in California’s law.
Under the header, “ALLOW GIG ECONOMY WORKERS TO UNIONIZE AND EARN A FAIR WAGE,” his website explains, “Pete will support codifying the simple ‘ABC test’ for classifying workers nationally in order to prevent workers in the gig economy from being denied minimum wage, overtime, and antidiscrimination protections–and their ability to unionize.”
“In order to classify a worker as an independent contractor under the ABC test, an employer must demonstrate that the worker (A) is free from the employer’s control, (B) is performing work that is outside the employer’s usual course of business, and (C) customarily works as an independent business in that industry,” Mayor Pete’s plan explains. It also calls for amendments to U.S. law to allow gig workers to unionize.
These kinds of regulations defeat the entire purpose of the gig economy. Companies like Uber and Lyft have provided workers a new opportunity to make a quick buck on their own schedules, choosing when to work and when not to work. Some drivers choose to work at “surge” times, when demand is high, to make more money. This flexible work helps the customers, the companies, and the independent contractors — who can come and go as they wish. Driving for Uber and Lyft works great as supplemental income and as an opportunity between jobs.
Yet A.B. 5 and Pete Buttigieg want to require Uber, Lyft, Door Dash, news outlets that hire freelance writers, truck companies with independent contractors, and more to treat these easy-come easy-go workers as employees. This would involve offering benefits like sick and vacation days, health insurance, and other “protections” under the Fair Labor Standards Act, Americans with Disabilities Act, or the Civil Rights Act. Minimum wage, overtime pay, and unemployment insurance would also be involved.
All this can add 30 percent to labor costs, hitting gig employers hard. It also undermines the very flexibility that makes gig economy jobs attractive to the workers.
Interestingly, some have argued that this flexibility is particularly good for women, people of color, and those who identify as LGBT. The American Society of Journalists and Authors, which has filed a lawsuit to challenge A.B. 5 on the grounds that it discriminates against journalists, made exactly the kind of argument Buttigieg would listen to.
“In a shrinking media landscape where hiring executives are still mostly white and male, AB5 places additional restrictions and burdens on women, people of color and the LGBTQ+ community by forcing many of us to seek staff jobs,” Los Angeles freelance writer and author JoBeth McDaniel, chair of ASJA’s First Amendment Committee, said in a statement. “Many journalists choose to freelance because we encountered discrimination, harassment and bullying in staff positions. Others — such as parents, caregivers and the disabled — need the flexibility of setting their own schedules and workloads.”
Restrictions on the gig economy will require companies that can somehow weather the storm to cut way back on their contracts with workers. They would hire fewer employees and many of them would go out of business. Just like minimum wage increases — which sound good in theory but end up putting people out of a job in practice — these laws would actually harm the very people California’s legislators and Pete Buttigieg aim to help.
California’s A.B. 5 maelstrom should convince Pete Buttigieg that targeting the gig economy for destruction in the name of empowering unions is a horrible idea. As of Thursday, however, he has not reconsidered his position.