This week Reform California, a 527 political action committee that fights things like tax hikes, held a webinar around AB5.
Writers and other independent contractors have heard their fill on AB5 over the past year. Social media is full of groups against AB5 and personal accounts of people who have lost work due to AB5.
To sum it up as briefly as possible, AB5 is a terrible law that redefines what it means to be an independent contractor. Reform California is one of the many groups working to get it repealed.
If you don’t live in California and if you don’t perform work for a California company, you’re not immune from its ill effects. There’s another awful thing called the Pro Act that will affect independent contractors across the United States. If it makes it through the Senate. Right now, while the Senate is mostly Republican, it looks like that ain’t gonna happen. But elections aren’t that far off.
Reform California recruited Carol Tice and Ed Gandia, who both coach and have coached dozens, if not thousands, of freelance creatives, to speak on the topic. Writer-cartoonist-consultant Lisa Rothstein also participated.
Here are some random takeaways from the webinar, along with a few 2 cents of my own:
– AB5 was intended to protect workers from exploitation. It’s also paid for by unions that want to increase their rosters, e.g., $$$ Herein lies the problem.
– The irony: most independent contractors affected by AB5 don’t give a hoot about unions.
– AB5 has no upside benefit to freelancers and has no relation to the realities of working America today. – Carol
– The gig economy is an unstoppable force that’s only getting bigger. It’s unbelievable that CA, a state that’s supposed to be open-minded and all about freedom, would pass this bill.– Ed (I agree. So much for the spirit of innovation.)
– The government wants us stuck in situations where we are “protected and taken care of.” They don’t like the unstoppable force because we’re hard for the IRS to keep up with. We want the flexibility and freedom to chart our own course. That worries the government.
– There is a crap-ton of misinformation out there, as well as a lot of false assumptions. Please seek out credible information! Don’t assume what your writer-friend on a forum says is true.
– Many companies are spooked by AB5. Rather than read the bill, consult a lawyer, and figure out a plan, they just stop working with CA-based freelancers. It’s not right, but it’s happening! Social media is full of stories of carnage.
– However, companies found in violation face huge fines.
– The 30-submission cap given to freelance journalists might be lifted. But who knows.
– Forming an LLC, making sure you have a business license, an EIN, a website and all the things you should have as an independent contractor may not protect you from the ills of AB5. Even if you think you fall under the B2B exemption (as an LLC might) you have to watch for clause (B):
“The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.” Lisa says this makes the copywriter-marketing agency relationship a problem, even if you’re an LLC, because you would be writing for the client’s clients. I have my doubts. How does the bill define “customer?” And “providing services directly?” Does it apply to the typical copywriter-agency relationship or is it intending to target employment agencies who “hire” workers on behalf of other businesses? Like much of the rest of the bill, it’s too vague.
– The IRS has a 10-point test that has been in place for eons. It is logical. But for illogical reasons, the ABC Test, which is more restrictive, is taking its place in many states. #IRSNOTABC
– The EDD is auditing businesses – during COVID-19 for chrissakes – for potential AB5 violations.
And Then There’s the Pro Act
– It’s frightening.
– It has no exemptions.
– It’s worse than AB5 and any similar attempts.
– Joe Biden supports the Pro Act.
– Most democrats support the Pro Act. My congresswoman, Barbara Lee, Barbara Lee who speaks for me? She doesn’t when it comes to the Pro Act. She supports it.
– If the Senate turns blue in the November elections, we’re screwed.
– That unstable thing that is our current President has said he would veto it if it lands on his desk. – Ed (description of our President as an “unstable thing” is from me)
What You Can Do
– Lean on your reps. Write, call, send letters. Tell them how you feel about the Pro Act, AB5, and similar.
– If you’re in CA: Vote YES on Prop. 22. It lets Uber and Lyft drivers, and similar app-based gig economy workers, remain independent contractors. Most of them want and need this freedom. Let them keep it.
– Sign this petition from Reform California.
– DON’T GIVE UP ON FREELANCING! Freelancers have the right to work and earn money.
– But treat your business like a business. Get a business license, pay proper taxes, decide on a business name and file a fictitious business name statement. This isn’t the time to be willy nilly. If you’re not organized, it will likely come back and bite you in the rear!
– Don’t accept “permalancer” jobs. If you spend 100% of your time writing for one client, you’re probably an employee.
– SPREAD THE WORD. Create awareness in your community and in your state.
– It’s important to get AB5 repealed because it will send a message to other states that these types of laws are unacceptable. – Ed
A pretty good AB5 101 article.