Guest Opinion: The Forgotten Victims of AB-5, the Controversial New Law Affecting Freelancers

Praise to Senator Anthony Portantino and Assembly member Chris Holden who agree that Assembly Bill 5 has a devastating effect on independent contractors trying to make a living. Especially affected are freelance journalists and photographers who are being robbed of their opportunity to use their creative gifts to make a living after devoting thousands of hours of hard work to honing their craft. AB 5 also limits the freedom with which this work can be performed, forcing contractors to adapt their busy lives to a regular 40-hours-per-week job instead of enjoying the freedom to choose their own schedule.

As scary as AB 5 is for freelancers, it’s horrifying for employers.

AB 5, left as is, could strip employers of the businesses that they worked so hard to build. It could jeopardize their livelihood forever. Senator Portantino was a featured speaker at our town hall in Pasadena three years ago. He is aware of the challenges small business owners face. And now, they face the uncertainty of AB 5.

According to the Economic Roundtable, the Coronavirus puts 47 percent of jobs in Los Angeles County at risk. Workers who have been displaced because of the pandemic are attempting to turn to the gig economy to survive.

AB 5 codified a recent court decision, Dynamex v. Superior Court. Dynamex created a new test to determine if a worker should be classified as an employee instead of an independent contractor. To pass this newly contrived test, the worker must perform work that is outside the company’s usual course of business – a standard that is nearly impossible in practice.

One of the problems for employers is that this new test is currently being applied retroactively. This creates lawsuits with a four-year retroactive window. Use of this four-year lookback is unfair for employers who were complying with the law before the game suddenly changed. The new standard sets employers up for massive penalties and shakedown lawsuits.

What makes this worse is that business owners across the state will face damaging Private Attorney General Act (PAGA) and class action lawsuits where one employee can sue on behalf of all the employees at the company, creating massive liability and uncertainty.

The overwhelming cost of an unexpected and unwarranted lawsuit combined with the increased cost of business could wipe them out overnight. In order to survive a lawsuit, businesses will look for ways to cover costs by cutting jobs, raising prices, decreasing production and, in many cases, shuttering their businesses altogether and moving out of state.

Senator Portantino and Assembly member Holden correctly realize AB 5’s unforeseen consequences on freelance journalists, photographers and musicians. Prior to the coronavirus, freelancers had the flexibility to work during times that work best for them. Now with AB 5 and the coronavirus, all those opportunities for flexibility and more importantly, stability are gone.

The very survival of employers and workers operating under the new law is at stake. Many jobs have diminished, in what many are calling the unintended consequences of the new law. Let’s protect both freelancers and employers who may also lose businesses and jobs they created because of the wrath of shakedown lawsuits that may be another unintended consequence of AB 5.