California is at the forefront of the United States’ “gig economy.” More than in most states, California workers tend to combine various sources of income – as freelancers or independent contractors – to cover their pay.
This is, in part, due to California’s position as a leader in the entertainment and technology industries. Particularly with entertainment, jobs naturally tend to more gig-related. A film production begins, and for most film workers, their job ends within a few months. The film may shoot for, say, three months, and the production crew goes off to other work. At that point, the post-production professionals begin their work, and their work may continue for many months – but seldom more than a year.
A similar situation also faces freelance writers and musicians. A Michael McDonald tribute band may require the services of a bassist for a particular run of shows. When the rehearsals and performances are over, that bassist moves on to other gigs.
In each case, the employer is not a multinational conglomerate, or a publicly traded company. In the event of the film, it is most often a production company that has been established exclusively to manage the production of that particular project. For the tribute band, the hiring party may be one of the band members – the person whose idea it was to book the run of shows, for example.
These are very different situations than those that would affect, say, a driver for Uber or Lyft.
Those companies are, at the present time, treating all of their drivers as independent contractors. Therefore, these drivers have limited legal protections.
For many of these drivers, especially for those driving 40 hours each week or more, the independent contractor status does not make sense. It makes it exceedingly difficult for these workers to protect themselves in case of illness, accidents, or other unforeseen circumstances. Working as non-employees usually means working without benefits, and without employer contributions to Social Security and 401[k] plans.
In an attempt to remedy this situation, independent contractors in California worked together to propose and pass new legislation. This bill, Assembly Bill 5 (AB5 for short), has formalized and codified a decision by the California Supreme Court, which stated that more companies must classify their workers as employees rather than as independent contractors. These companies must therefore provide overtime pay for their workers.
Uber says that it will not reclassify its drivers as employees. The ridesharing company plans to defend its decision in court, as the state of California will most likely sue.
AB5 takes effect on January 1, 2020. Many professions applied for exemptions from AB5, and won those exemptions. Those jobs include those of graphic designers, travel agents, grant writers, lawyers, doctors, accounts, psychologists, veterinarians, and dentists. Also exempt from AB5 are stockbrokers, engineers, commercial fisherman, hair stylists, and HR (human resources) administrators.
Two professions that were not able to get exempted, but that deal extensively with freelancers – writing and music.
Let’s look at music. If a drummer puts together a jazz quartet, and that quartet makes a few hundred dollars playing a dinner set at a restaurant, then generally the drummer splits the money casually between the four players. Under AB-5, that drummer will need to treat those other musicians as employees, and pay the additional fees needed to cover Social Security and other expenses. In sheer paperwork alone, it could cost the average musician thousands of dollars each year.