A few hundred people attended Senator Andreas Borgeas’ town hall Feb. 27 at Clovis Community College to discuss concerns over Assembly Bill 5.
Workers and employers in several industries, including app based drivers, freelance writers, photographers and artists, to name a few, attended the event to learn how AB5 will impact them.
John Heffron is a retired transportation broker employee who now works part time as an Uber driver. He said AB5 has not yet affected his work, but worries about its implications for the future.
“I have an interest in this because it is going to mess everything all up,” Heffron said. “I expect everything is going to be changing.”
Gov. Gavin Newsom signed AB5 into law on Sept. 18, 2019.
The law codifies and expands upon the California Supreme Court’s decision in the 2018 Dynamex Operations West, Inc v. Superior Court of Los Angeles.
The case resulted in the Court adopting the “ABC Test” as a general rule to distinguish employees from independent contractors.
Part A of the test requires that the worker is free from the control and direction of the employer in connection with the performance of the work, both under the contract for the performance of the work. Part B requires that the worker perform work that is outside of the usual course of the hiring entity’s business. C requires that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
Simply put, AB5 requires independent contractors who do not pass the ABC Test to be classified as employees.
Proponents of the bill hoped it would end systematic worker misclassification.
Assemblywoman Lorena Gonzalez, the author of AB5, said in a social media post, “AB5 allows for an individual company to utilize a freelancer 35 times before either making them an employee, or establishing a business to business relationship with the writer. It seeks to eliminate exploitive permalance positions, not legitimate freelance opportunities.”
But independent contractors and employers from industries ranging from app-based driving to journalism have criticized the bill for taking away the flexibility that freelance work offers.
Many in the audience at the town hall said AB5 upended their way of life, as they feel the new law is forcing them to become employees.
“I guess we are eventually going to have to be employees, which usually means you have a supervisor, which means you’ll be told when and where you can drive,” Heffron said.
He said he enjoyed the flexibility that Uber offered, but now that freedom is being taken away.
“When I retired I did not plan on having to ask for days off. If I didn’t want to go to work and if I wanted to fly to visit my oldest daughter’s family, I could just work a little harder the week before,” he said.
Roderick Hewlett, a minister who works as a Lyft Driver, was a panelist at the town hall. He said that if he is forced to work as an employee for Lyft, he would no longer have the flexibility that allows him to perform his duties as a minister.
“(Working as a Lyft driver) it’s been a process that has been very helpful in allowing me do the sacerdotal things I have to do as a minister. That flexibility is very important,” Hewlett said. “I can put on a necktie, go into a funeral home or church and read someone’s funeral, and then can go back into the car without having to say ‘Mother, may I?’”
Don Watnick, treasurer of Clovis Centerstage, was not able to attend the town hall, but told the Roundup that AB5 poses an existential threat to community theater nonprofits around the state.
“With AB5 we are uncertain with our ability to continue. It is apparently affecting community theater up and down the state,” Watnick said.
Centerstage uses volunteer actors for its eight productions that occur each year. But under AB5, Centerstage and other community theater nonprofits would have to hire actors, as well as choreographers, stage hands, voice coaches and directors, as employees.
That’s something community nonprofits simply cannot afford, Watnick said.
“We are in a position where we can do that because it would entail becoming some kind of a corporation. To get in the business of hiring staff, we don’t have the money or resources for that kind of an effort,” he said. “Very few community theaters would.”
Paul Bauer, an attorney who represents employers in business and employer litigation, was also a panelist. He said AB5 has unintended negative consequences for independent contractors and employers alike.
“The law is very black and white, you either are classifying people correctly or you are not. The problem is these small penalties that kick in over a long period of time that can be added up and cause significant financial exposure to all who are involved,” he said.
He continued, “I receive daily alerts of lawsuits that are filed from Bakersfield to Sacramento and there are employment lawsuits filed every single day and many of them regard these misclassifications.
“AB5 has opened up another tool for these types of claims to be brought. Having lived this day-in and day-out in my profession, you as a business owner or you as a worker, don’t want to get caught up in that.”
Borgeas said AB5 has impacted more than 2 million Californians, including 700,000 in the Fresno area.
He said AB5 is a politically motivated law that was enacted to force independent contractors to become employees and unionize.
“The theory was that if you forcibly reclassify individuals from freelance independent contacting status into employee status… you swell the ranks of folks who are considered employees for purposes of pushing them into unions,” Borgeas said.
The senator said a loophole in AB5 makes employers retroactively liable for misclassifying employees up to four years before the bill was signed into law.
Borgeas introduced SB 967 in February to close that loophole.
“I introduced SB 967 that is designed to close that loophole that says you can go back in time and hold individuals accountable if they had no reason to understand what the appropriate test was,” Borgeas said.
California lawmakers on both sides of the political aisle have already introduced several pieces of legislation designed to limit and even repeal AB5.
That legislation includes assembly member Kevin Kiley’s (R-Sacramento) Assembly Bill 1928, which would repeal AB5 and replace it with a more relaxed test to distinguish between independent contractor and employee. The State Assembly rejected the bill the same night as the town hall, however.
Other pending legislation would exempt certain industries, including youth sports referees, family therapists and musicians.
There is at least once industry that has become exempt from the bill because of legislation.
Gonzalez introduced Assembly Bill 1850 in February to amend part of AB5. The bill would delete the requirement that freelance journalists and photographers can annually submit 35 contributions to a single publication in order to remain independent contractor.
In order to qualify for the exemption, freelance photographers, photojournalists, writers, editors, and newspaper cartoonists must provide services that, “specifies in advance the rate of pay, intellectual property rights, and obligation to pay by a defined time, as long as the services are not replacing an employee, and the freelancer does not primarily perform the work at the hiring entity’s business location and the freelancer is not restricted from working for more than one hiring entity.”
Many in the town hall audience expressed hope that their industries become exempt or that AB5 is eventually repealed.
The only thing that seems clear is that more AB5-related lawsuits are expected to come in the following months.
“I’m told by both Uber and Lyft that there will be lawsuits and repeals. I thought they were going to put something on the March ballot to try to exempt the gig drivers, but maybe it will be on the next ballot,” Heffron said.
“I just don’t know how it is going to work for me,” he continued. “I might have to do something else.”