When the infamous labor bill Assembly Bill 5 (AB5) was passed into law in September 2019, the California state legislature codified and expanded a rigid ABC test beyond the wage mandates to include all provisions of the labor and unemployment insurance codes, thereby controlling the entire independent workforce.
Everyone loves the party game “Two Truths and a Lie.” Can you identify which of the three following statements about AB5 is a lie?
A. AB5 affects a vast swath of professions and sectors in California.
B. Proposition 22 did not repeal AB5.
C. AB5 has protected workers in California.
Let’s take these statements one at a time:
A. TRUTH. Assembly Bill 5 (AB5) passed in 2019 and enacted in 2020 is still the law and continues to wreak havoc across a vast swath of professions and sectors in California—everything from healthcare, performing arts, event planning, and tutoring to transcription, independent filmmaking, community theater, and videography. While there are almost 100 exemptions in AB5, most of them come with caveats and fine print.
Just because a certain profession has received an exemption doesn’t mean that the exemption can be taken advantage of. Many of the exemptions are “partial” and must meet up to 13 requirements in order to bypass AB5’s ABC test. Some professions like doctors, lawyers, and real estate agents received blanket exemptions from the ABC test, but all independent contracting relationships must also pass California’s traditional Borello worker classification test, which is more flexible than the ABC test and has been in effect since 1989.
In September 2020, California passed the “cleanup bill” AB2257 which added more exemptions for chosen professions and some “clarifications” to some of the ambiguous language in AB5. There are still hundreds of categories of professions left out in the cold; AB5/AB2257 remains as convoluted as ever.
B. TRUTH. Proposition 22 (Prop 22) was a ballot initiative that provided an exclusive carve-out for rideshare and app-based delivery services including Uber, Lyft, Instacart, and DoorDash from AB5. It passed by nearly 60% of the voters in November 2020. Prop 22 did not repeal AB5 for all independent contractors nor did it exempt the entire gig economy. The so-called “gig economy” includes many other sectors such as domestic work, tech, and all manner of work available via online platforms, none of which are exempted from AB5 via Prop 22.
Moreover, in August 2021, a Superior Court judge in Alameda County ruled Prop 22 unconstitutional. The rideshare and app-based delivery industry is currently appealing the ruling, and Prop 22 remains in effect during this process.
The trucking industry had a preliminary injunction against the enforcement of AB5 from January 2020 until June 2022 when ongoing legal challenges came to an end because SCOTUS declined to hear the case on appeal. The preliminary injunction was dissolved and the Ninth Circuit’s ruling against California Trucking Association’s lawsuit prevailed. AB5 is now officially in effect in the trucking sector.
C. LIE. AB5 was passed in the name of protecting workers from predatory employers by forcing them to unionize. Instead, it has destroyed the livelihoods of thousands of independent contractors in California. Some have found different professions; others have left the state. These professions lost their contracts with companies and only a tiny fraction was hired as employees—losing the flexibility and freedom of being independent contractors. The large majority of independent contractors prefer the flexibility of contract work to a traditional job. And many of these workers may also have trouble finding traditional work due to situational limitations or disabilities.
Independent contractor work is not simply a last resort for individuals. Instead, many of them seek it and prefer it. Americans should be free to choose where and how they work and find what works best for them.