The California law that pits artists against Uber drivers

The passage of AB-5 speaks to the promise and the difficulty of tearing down the gig economy.

The California law that pits artists against Uber drivers

The passage of AB-5 speaks to the promise and the difficulty of tearing down the gig economy.

“Hi there, rejects,” Walter Kirn said to laughs from the crowd of 100 or so people gathered in front of the west steps of the California State Capitol building on Tuesday. “We represent the very center of the American experiment.” Under a damp January sky the color of a dead rat, the capitol building’s typically shining facade was obscured by a white plastic-wrapped scaffold, sparse construction crews scurrying around and blankly looking out at the rally.

Kirn, most famously known as the author of the novel Up In The Air, among several others, stood flanked by half a dozen Republican state politicians, speaking to the restless crowd of truckers, musicians, and writers who traveled to Sacramento to voice their anger with and demand the repeal of Assembly Bill 5. “There are careers lost to AB-5,” Kirn said, shortly after invoking Sacramento patron saint Joan Didion, “But what haunts me even more is the careers that will never begin.”

AB-5 is an ambitious bill passed last year and signed into law earlier this month that seeks to force companies to hire workers who have been previously, and often unfairly, classified independent contractors, thus being denied the suite of protections offered to employees; companies frequently take advantage of such contractors’ less-expensive, and far less protected, labor. The bill’s defenders see it as an attempt to wrest back control of an economy that has less worker control than ever before, while its opponents contend that the immediate-term loss of contract work for those who rely on it will kneecap any attempts at sweeping change.

The villain of the day was the bill’s author, assemblywoman Lorena Gonzalez, a Democrat who represents southern San Diego. “I believe people like her seem to have embraced the political ideologies of Marx and Lenin over those of Lincoln and Washington,” state Sen. Mike Morrell, a Republican, said. A woman proudly held up a large photoshopped Buffy the Vampire Slayer poster that declared her “LORENA THE FREELANCE SLAYER.”

A poster from the January rally against AB-5 in Sacramento. Photo by Patrick Reford

A poster from the January rally against AB-5 in Sacramento. Photo by Patrick Reford

Reclassifying workers as employees instead of contractors is a substantive plan to backstop the decades-long capitulation of labor at the hands of management. “What AB-5 stands for is the real structural pushback to the project of fissuring of work,” Veena Dubal, law professor at the University of California-Hastings and a labor scholar whose work was drawn upon to craft AB-5 said.

But to thousands of people, like the ones huddled outside of the capitol on that gray day, that ambition doesn’t sufficiently address the pain AB-5 is now causing. People have functionally lost their jobs and have had to radically reshape their businesses on the fly. The incensed reaction to the bill is the shudder of structural change clashing with a broken system that has been deteriorating faster than ever.

First, some history. AB-5 codifies a precedent set by an April 2018 decision from the California Supreme Court in the case of Dynamex Operations West v. Superior Court. In ruling against Dynamex, the Court established a stricter definition of an independent contractor under a new set of standards known as the ABC test, which Dubal said labor advocates had been seeking “for decades.” Those new standards: (A) the worker must be free from company control; (B) the worker is performing work that “is outside the usual course of the hiring entity’s business”; and (C) the worker is “customarily engaged” in relevant work. AB-5 amends the California Labor Code to apply the ABC test to every employer who makes use of independent contract labor in an effort to ensure previously misclassified workers are not unfairly denied the benefits and protections afforded to employees, such as overtime pay, workers’ compensation, unemployment insurance.

Tweaking the language around which IRS form a worker qualifies for might seem like a minor change, but it represents a significant legal challenge to companies like Uber and Lyft that rely entirely on contract labor. Naturally, they view the bill as an existential threat. The CEOs of the two companies wrote a joint op-ed in the San Francisco Chronicle last June admitting that having to pay their drivers minimum wages and offering them basic protections “would pose a risk to our businesses.” By last fall, they and the startup food delivery service Doordash had pledged to spend $90 million to fight the bill and get a ballot initiative passed that would invalidate it.

In creating the labor structures of their companies, they bet that America’s atrophied labor regulations would not catch up with them, and that bet paid off.

That quote is the clearest admission you’ll ever see that the 11-figure valuations and overwhelming power accumulated by the two rideshare companies is only possible if they screw over their drivers by misclassifying them as contractors. In creating the labor structures of their companies, they bet that America’s atrophied labor regulations would not catch up with them, and that bet paid off. As a result, they’ve earned their investors billions without ever having to cover state and federal income tax or provide worker’s comp for what is now one of the most dangerous jobs in the country.

That Uber or Lyft would push back so hard against a law that could so greatly damage their business is unsurprising. And, indeed, since the bill has gone into effect, Uber has seemingly acknowldged the pressure it's under, announcing that it would test a feature in California allowing drivers to set their own rates (the major gig economy companies are all, for now, still treating their workers as contractors). But what’s notable about AB-5 is not the angry pushback from the ride-hailing giants — it's furious response from those the bill seeks to protect.

I spoke to people at the rally who had lost work from employers they’d contracted with for years, employers faced with the choice to hire people on as full-timers or cut them loose to stay in compliance with the law. I heard a crew of truckers wondering if they’d have to leave the state soon if an injunction exempting them from AB-5 doesn’t hold up in court. Two groups of freelance writers have filed a lawsuit against the state of California, funded by the Big Oil-backed Pacific Legal Institute, seeking such an exemption for themselves. Members of the Freelancers Against AB-5 Facebook group representing dozens of trades, from opera singers to fitness instructors to mall Santas, have outlined exactly how they have lost money because of shrinking contract work. A chiropractor named Dan Fung wrote, “I just lost a contract where I would ironically treat injured workers and help them get back to work. 😡”

Dubal stressed to me that this gig economy is, in the first place, purely a product of misclassification: these workers should never have been independent contractors in the first place. Powerful companies boast that contract arrangements offer flexibility, but in material terms the only difference between a traditional job and, say, 40 hours of week of driving for a rideshare service, is that the contract worker shoulders a legal and financial burden traditionally borne by the employer.

Brian Dolber, an organizer with the group Rideshare Drivers United, agreed with Dubal’s assessment. “By not adhering to basic labor standards that employees have, drivers are often making far below the minimum wage,” he said. “If this is your main source of income, that means you’re driving 40, 50, 60 hours a week. Well that doesn’t seem very flexible.” Our new tech overlords have adopted this sort of arrangement at an unprecedented scale, but it’s not a new concept.

The key innovation that made FedEx into a shipping giant in the ‘80s, for example, was the mass hiring of contract labor over full-time employees. This practice is now ubiquitous. A 2016 study found that almost all the net job growth in the previous decade was from these so-called “alternative work” arrangements. One key issue that non-employee workers have is an inability to organize. “It’s not just the 30 percent overhead of employment [that concerns opponents of AB-5], it is ultimately having to deal with workers who are organized and empowered and are able to take their fair share of profits,” Dubal said.

“From the perspective of rideshare drivers, this [law] is really crucial in making sure there’s basic employment rights,” said Dolber. “But beyond that, independent contractors don’t have the right to unionize. What we want is to secure a voice on the job and that means that we need a union and that means we need to be classified as employees.”

Last December, New York-based Vox Media announced that it would be eliminating around 200 basement-level freelance positions from its network of SB Nation team sites because they did not want to make the bloggers in question full-time employees under AB-5. SB Nation employs around 40 full-time editorial employees and oversees 300-plus team sites, which reportedly account for a “significant portion” of overall traffic. Per the Vox announcement, the 25 California-based team sites would no longer receive the $600 per-site stipends Vox paid them for their work, and in-house employees would take over.

To justify this mass firing, Vox cited one of the most controversial aspects of the rollout of AB-5: the submission cap for freelance journalists. As Lorena Gonzalez told The Hollywood Reporter last October, the new law stipulates that media companies can publish up to 35 pieces per year from a single writer before they have to bring them on as employees. The cutoff was intended to force outlets to hire anyone who wrote as much as a weekly columnist, though in the immediate term, it’s caused mass confusion among freelancers. Why, for example, are photographers exempt from the law, while videographers are not? The rollout was not handled with much care, like when Gonzalez admitted that the 35 submissions cap was “a little bit arbitrary,” and that has probably juiced up much of the hatred of the new law.

The reaction from national outlets has been mixed; an editor of a national magazine told me he’s not aware of any plans to cut off California freelancers, while a recent call for freelancers from a GameSpot editor specifically excluded California freelancers. One freelance writer told the Hollywood Reporter, "I have heard from clients that they're just going to avoid working with California freelancers." Since so many writers are jockeying to get published at national media outlets, Californians could be at a competitive disadvantage relative to their peers from the other 49 states. More concerningly, it’s put the squeeze on smaller weekly and daily publications that rely almost exclusively on freelance labor.

It would be unfair to blame AB-5 for attempting to regulate the endemic cheap contract work on which the industry has come to rely.

Editors for the Bay Area Reporter, a weekly serving San Francisco’s LGBTQ+ community, wrote that AB-5 would “be a crippling blow, as the Reporter relies on about 50 freelance reporters, critics, photographers, and delivery drivers.” An editor of a California-based publication with three full-time staffers told me that they now have to scramble to find several more qualified freelancers to cover for the weekly contributors who write the bulk of the output. The publication’s output has not dropped and its budget has not shrunk, but there is less money for each writer, and writers affected by AB-5 have to seek out more outlets to publish them.

The sorts of publications most affected by the law are small, local ones like alt-weeklies, which have already been carved to pieces by vulture capitalists over the last decade. However, it would be unfair to blame AB-5 for attempting to regulate the endemic cheap contract work on which the industry has come to rely. The modern media industry depends on those who hold jobs all but in name, and for the class of writers that’s come up in the past two decades, this is all we know and all we expect.

The resurgent media union movement is largely a reaction to this atomization of the industry. Those eliminated Vox gigs were not jobs, though across the network they accounted for a reportedly “significant” amount of SB Nation traffic. AB-5 hurts right now, especially with its confusing standard for exemptions, but it is a genuine attempt to correct for the sort of exploitative practices that ruined so much of the industry in the first place.

I am a newly minted California freelance writer because of the actions of one such media company owner, whose mismanagement led me and every single one of my coworkers to quit our jobs at the massively successful sports website Deadspin. Since getting spit out into the cutthroat world of freelance writing, I’ve been published at both national and local outlets, mostly without interference. Bicycling Magazine published a story by me on Nov. 13 and I filled out a W-9 form to collect my $400 one day later. A month passed only for a human resources representative from the magazine’s parent company, Hearst, to inform me one month later that, according to their legal department, I do not fit the bill for independent contract work. I have no reason to think I won’t get paid eventually, though it has been a tremendous pain in the ass.

I am also fully aware that I am one of the lucky ones, and that the people who deserve concern are those who have been forced to hustle for years on contract gigs while, say, also covering their family's health insurance. My point here is that those sorts of workers and writers should never have had to hustle in the first place. The mechanics of the rollout of AB-5 and some of its rulings towards journalists, as well as those in similar industries like music, have been confusing and poorly implemented, but the heart of the issue is that the ownership class bears full responsibility for the state of things. Gonzalez and governor Gavin Newsom bear responsibility for the rollout, though the former is a larger issue than the latter. The exemptions were underexplained and poorly understood, and the Hollywood Reporter’s October story seems to indicate that even many publications aren’t sure how to deal with the new law.

“It’s not like [companies] actually have to get rid of [workers] as a result of the law,” is how Dubal put it to me. “They’re just accepting that it is natural and necessary for the employers to do away with them if they actually have to pay them for their work.”

I hope that the short-term pain caused by a labor shakeup across hundreds of industries will be worth the recentering of worker power. Perhaps there’s some room for exemptions in certain cases, and the abrupt implementation of the law can be blamed for the acidity of the reaction. But recognizing that the system of labor in this state and country needs a jolt from something like AB-5 is a painful yet necessary step. I saw real anger at the rally being funneled towards the easy target, not the correct one. “The state is eliminating your job,” is a much easier story to tell than, “Decades of deliberate erosion of worker power have crippled you, and the only way to fix it is fighting back."

Patrick Redford used to work at Deadspin. He lives in San Francisco.