AB5: Will CA’s Gig Law Be Overturned?

Patrice Onwuka joins the podcast to discuss California’s Assembly Bill 5, or what is better known as AB5. We’ve discussed this gig law on past episodes of She Thinks, but we wanted to give you an update as there’s mounting pressure from independent contractors to overturn it. Patrice Onwuka gives us an update since the law’s implementation in January and previews what this law could mean for your state.

Patrice Onwuka, is a senior policy analyst at Independent Women’s Forum. She has worked in the advocacy and communications fields for more than a decade. Prior to joining IWF, Patrice served as national spokeswoman and communications director at Generation Opportunity, and worked at The Philanthropy Roundtable and the Fund for American Studies in policy and media roles. She also held consulting roles as a speech writer for a United Nations spokesman And you can catch her regularly on Fox Business and Fox News.

TRANSCRIPT

Beverly: Welcome to She Thinks, a podcast where you’re allowed to think for yourself. I’m your host Beverly Hallberg and on today’s episode we discuss Assembly Bill 5 in California or what is better known as AB5. We have discussed this new gig law on past episodes, but we wanted to give you an update as there is mounting pressure from independent contractors to overturn this law. Patrice Onwuka joins us to give us an update on where things are since it was implemented in January and also what this could mean for your state. Also know that there is a policy focus on AB5 on the IWF website. And if you’ve been negatively impacted by this law, we’d love to hear your story. You can reach out to us at iwf.org.

Now before we bring Patrice on, a little about her. She is a senior policy analyst at Independent Women’s Forum. She has worked in the advocacy and communications fields for more than a decade. Prior to joining IWF, Patrice served as national spokeswoman and communications director at Generation Opportunity and worked at The Philanthropy Roundtable and the Fund for American Studies in policy and media roles. She also has held consulting roles as a speech writer for a United Nation spokesman and of course you can catch her regularly on Fox Business and Fox News.

Patrice, thank you so much for joining us again.

Patrice: Thank you so much Beverly.

Beverly: So this law was implemented in January. I gave, as you heard, a little brief update on what this is, but before we get into where things are, can you give us just a general overview of what this law is intended to do?

Patrice: Well, AB5 is intended to force many independent contractors to become employees of the companies who hire them. It is called the Gig Law because it was targeted at gig companies like Uber and Lyft and DoorDash to turn their drivers into employees of the company. And unfortunately, and not surprisingly, it had widespread unintended consequences of sweeping thousands, maybe tens, hundreds of thousands of independent contractors in various industries and occupations, sweeping them all up into this law. It’s been harmful. We’ve seen reports of many contractors who’ve said they’ve lost their contracts. They cannot replace their incomes. They’re finding it difficult for former employers to give them new contracts or to get new work.

So this is what happens when you have government trying to tamper with the free market system in an effort to boost the number of workers, union members, et cetera, and unfortunately it’s the small business owners who lose out.

Beverly: Ironically it was named the Workers’ Rights Law from those who are proponents and were pushing this forward. Can you give us some of the specifics of what it’s meant to people who are independent contractors and also what it’s meant for small businesses? You mentioned unintended consequences. What are some of the specifics that has made this law so hard for people?

Patrice: Well, it does three things. Number one, it raises the cost for business. There’s a reason why employers or businesses will hire an independent contractor rather than a full-time employee. Not surprisingly, it’s about the cost of wages, of salaries, of paid time off, all of those wage and labor laws that they have to abide by for employees that they don’t necessarily have to abide by for independent contractors.

Now that’s not to say Beverly, that independent contractors are not paying taxes, they’re not paying payroll taxes as well, or into the system where somehow that employers and businesses are robbing states and the federal government’s money. No. There’s plenty … that that does happen. The independent contractors do pay their taxes, et cetera. But this was meant to do that. And so businesses now are seeing a 20 to 30% increase in costs because of now taking independent contractors on as full-time employees. They may just say, “You know what? We can’t swallow that kind of cost. We’re just going to cut everybody loose.” That’s what we’ve seen with, for example, Vox Media who cut loose 200 writers and only took on about 20 full-time employees. So number one; raises the cost for business.

Number two, it threatens the economic security of work. These are people who want to just be able to work on their own time, on their own terms, make their own schedules, and now they’re seeing those opportunities dry up as I mentioned.

And unfortunately number three, this is killing flexible work in California. No longer are you going to see these opportunities where you can be your own boss, an independent contractor, a freelancer working around your schedule and your priorities, that disappears when you no longer have those opportunities.

These are three harmful impacts as a result of AB5. Again, everyone from musicians to ballet dancers, probably belly dancers to writers, to truck drivers, so many industries have been impacted because of this bill.

Beverly: I hadn’t thought about belly dancers being impacted, but you’re correct, many of them do work as independent contractors.

I’m going to play devil’s advocate just a little bit here Patrice. What about those independent contractors who say, “But I really need benefits. I need health care. It’d be great if I had a retirement package, but because I have this independent contract style of work, I’ve never been able to get that.” So are there certain independent contractors who maybe they don’t have a spouse with benefits that they can use or this isn’t just a part-time job, it’s actually their full-time job that think this is working well for them?

Patrice: I’m sure there are. I mean when we look at some of the polling data, nearly 75% of freelancers are working independently by choice. That means maybe a quarter are working by force and maybe they do want those benefits. They do want paid time off. They do want health care provided by an employer. In that case, I can understand wanting to see full-time employment, but does that mean that you need a statewide law that forces everyone to become full-time employees?

Now that’s a naive assumption that that’s exactly what’s going to happen because of the law, because as I mentioned, when you’re raising costs 20 to 30% as an employer, you may just say, “You know what? Forget it. I may automate. I may figure out some other way around bringing new staff people on.”

So my heart goes out to those who are independent contractors who do want health care, who do you want some of those benefits, but for the most part, most of them understand that there is a trade off for those benefits, for the guaranteed pay, and that trade off is flexibility. That trade off is the ability to make their own schedule to determine when, how and for whom they work and they’re willing to make that trade off.

Beverly: Here’s what I’ve wondered as well as we see millennials entering, not just entering the workforce but aging and we are going to have even younger generations entering the workforce, have we seen independent contractor, that type of job, that style of work being more attractive as a whole as well, so this is going to become even more important to how we deal with independent contractors.

Patrice: I think so. When you look at the fact that in 2019 about 57 million Americans reportedly did some freelancing, that’s pretty significant. Now, it may not be that you have 57 million Americans being full-time freelancers, but these are people who could be augmenting their full-time [inaudible 00:08:09] employee jobs with a side hustle, as the millennials say, or with side work. And so I think millennials, working mothers, people who are caregivers, these are going to be individuals who are looking for those flexible work opportunities. And thank goodness we have an economy that’s generating those types of opportunities with simply your phone and your car, or utilizing the skills that you may have elsewhere and using technology to find someone willing to pay for your time and your talent. So yes, this is not going away.

Now freelance work, independent contracting is not new. It’s not because of the gig economy that suddenly it’s come up on our radar, but I think the gig economy has expanded the number of opportunities and types of opportunities that individuals can obtain. And it’s made it so much more accessible to lots of different people. So like I said, that soccer mom who wants to make some money between school drop-offs and pickups in the morning and afternoon, talking about people who have aging baby boomer parents that they need to take care of, take them to doctor’s appointments, they are looking for flexibility and that’s not going to change.

Beverly: Let’s now get into where things are. We know that there has been pushback, people wanting the law to change. Has there been any traction in trying to overturn this law in California?

Patrice: Oh man, Beverly, yes. Number one, the outpouring of support and outrage, frankly, because you are challenging someone’s livelihood. It’s been amazing to watch on social media. We have seen literal in-person protests organized against AB5 from writers to people in Hollywood coming together to say, “No, this law needs to change.” We’ve seen some bills being introduced.

So tomorrow, this is a really big update for everybody, AB 1928 introduced by Assemblyman Kevin Kiley is going to be voted on and this would literally overturn the entire … it would repeal AB5 entirely and go back to the previous legal standard for determining who is an independent contractor and who is not. This is a really important effort. I think Assemblyman Kiley, he’s been a champion in promoting the stories of people who’ve been hurt. And so this law would really just undo everything that the original AB5 bill does.

Again this is not taking away regulations. This is not saying, “Oh well, anybody can call themselves an independent contractor.” This would take us back to the previous Weigle standard, which was much more flexible in determining who would be an independent contractor. Unfortunately AB5 tightened those restrictions to the point where now people in those occupations are struggling.

That’s coming up tomorrow. I’m looking forward to giving everybody an update on our website at IWF. We’re also seeing there is a potential ballot initiative this November being funded by Uber and Lyft and DoorDash. We also have three legal challenges from the Truck Drivers’ Association, from the Writers Guild and from Uber and Postmates as well.

So there are legal challenges, there are legislative opportunities to repeal this bill and then maybe the voters will overturn it in a referendum. But what’s key is the pushback is loud and clear; this is a bad bill and it needs to be removed.

Beverly: We want to hear your story as well. I mentioned that at the top of the podcast, but if you’ve been negatively impacted by AB5 do go to iwf.org. You’ll see a place where you can click and share your story. We’d love to hear from you.

This brings up another part of this. So what if we have listeners today, they say, “Well not really a big deal. I’m not from the State of California so this doesn’t impact me,” but this is impacting independent contractors all across the country, correct, because we do have people working across state lines?

Patrice: We do. You do have people who live in another state but work in California and from what I understand the bill applies to you.

Number two other states are taking note. We know that California tends to be a leader and unfortunately bad policy that hurts people even if it was intended to help them. And so New Jersey for example introduced very similar legislation to AB5, taking their strict ABC test and trying to implement it there. We’ve seen other states introduce similar legislation that didn’t pass their legislature’s last session but maybe reintroduced this one.

And then we have the federal level. Congress has introduced and voted on in the House of Representatives the PRO Act. It is not pro-worker, it is not pro-woman, it is pro-union and they too copy and pasted the AB5 stricter restrictions on independent contracting and would nationalize it.

So we are watching what’s going to happen with the PRO Act. By the way, there are tons of other horrible things in the PRO Act that workers should be fearful of. But this one specifically, it has passed the House of Representatives largely on political lines and largely supported by Democrats and a handful of Republicans, but the question is whether it passes in the Senate. And so it’s very important that we continue to make a strong educational push to ensure everybody understands that nationwide this would be detrimental to the small business world. It would kill so many independent contractors and just individuals who have a phone, who have a laptop, who have skills and talents and say, “You know what? I’m going to hang my own shingle. I’m going to do my own thing.” So we’re keeping an eye on what happens in Washington as well.

Beverly: Final question for you is as we look to California and see whether or not they’re going to overturn this, they have been the leader in this, what is the likelihood that this law will be overturned? Is there any possibility or is this just a valiant effort by a legislator there who’s really trying to do his best to bring this at least into the public square for us to talk about?

Patrice: I don’t know, honestly Beverly. I’m hoping that it’s more than just a valiant effort because lawmakers are hearing directly from their people, their constituents about the harm of this bill and not just, “Oh, it’s bad for the economy.” They’re hearing, “I cannot find work. I need to feed my family. How could you pass this?” That is the kind of response that you cannot ignore. And so I believe and hopeful that these law makers will say, “Wait a minute, maybe we pushed too far, too fast and too hard with this thing.”

Now if they overturn it and go back to the previous legal standards that would be great. What’s also happened is that you may see some additional exemptions. Interestingly enough, lobbyist groups for some occupations were able to get their occupations exempted entirely from AB5. That is the wrong way to do it. Beverly that is pay for play. And that is unfair to all of those small businesses who don’t have the money to do pay for play and democratically it’s wrong.

So what I worry though, is that even if the bill was not overturned, there may be some smaller bills or efforts to say, “Well, let’s exempt this group. Let’s exempt that group. Let’s exempt the biggest voices in the bunch. We’ll exempt the artists. We’ll exempt the writers and the musicians.” That can also work. That could also happen. And that would not be good because the law is fundamentally flawed. It needs to be overturned.

So I’m hopeful that tomorrow’s vote goes well. We know the California Legislature is controlled by Democrats entirely and the Governor’s Mansion is controlled by a Democrat, but hopefully they’ve heard enough of a pushback from people who had been sincerely economically disadvantaged because of this bill that they’re willing to go back to square one.

Beverly: Well we so appreciate your efforts and IWF efforts on an AB5. So Patrice, thank you not only for your hard work on this, but sharing where we are today on AB5, so thank you.

Patrice: Thank you Beverly.

Beverly: Thank you all for joining us today. Before you go, I did want to let you know of another great podcast you should subscribe to in addition to She Thinks. It’s called Problematic Women, and it’s hosted by Kelsey Bolar and Lauren Evans where they both sort through the news to bring stories and interviews that are of particular interest to conservative leaning or problematic women. That is women whose views and opinions are often excluded or mocked by those on the so called feminist left. Every Thursday hear them talk about everything from pop culture to policy and politics by searching for Problematic Women wherever you get your podcasts.

Last, if you enjoyed this episode of She Thinks do leave us a rating or a review on iTunes, it does help. And we’d love it if you shared this episode so your friends know where they can find more She Thinks episodes. From all of us here at Independent Women’s Forum, thanks for listening.