Note that this article, “Commentary: Three Things I Don't Like about AB5 As an Independent Contractor” is the second of a six part series we will be posting about California Assembly Bill 5 (AB5) that will be voted on sometime this week. We published this week's episode of the Deliver on Your Business podcast early due to the pending passage of AB5. Normally we run a companion post that matches the podcast episode. There's just so much to talk about with AB5 that it couldn't be fit into a full episode, so I decided that a series related to it would make more sense.
Here's the deal. There are some things that I really dislike about AB5. There are some reasons that I think AB5 is necessary. I think both sides of the argument have enough validity that they each deserve more than an arms length treatment.
California is about to pass AB5, or Assembly Bill 5. It is expected to be signed into law, and when it is it will determine that a three part test would be used to determine whether or not a company can designate you as an independent contractor instead of as an employee. In the first part of this series, we talked about those three tests and how they apply to the gig companies in the on demand delivery space.
I chose this line of work specifically because I could be an independent contractor.
This is a personal preference. I would much rather be an independent contractor. I do not want to be an employee.
Now understand this, I do not live in California. I live in Colorado, which is a state that could eventually follow suit. By the time that happens, IF that happens, I would expect that I have moved on from on demand delivery.
Having said that, if I lived in California, I would be one unhappy camper right now.
I do this to support my ability to do some other things that right now are not revenue generating. I have to have the kind of flexibility where I can make schedule changes on the fly. I prefer the independence because I truly treat this as a business. That means working with multiple customers (and I consider Grubhub, Postmates, Doordash and Uber Eats to be my customers).
Here's the thing, and I'll get into this more in the next article in the series: I understand the need to protect people from being designated as business owners who really have no business being business owners. I get that. But I am not happy about a system that would force someone to become an employee who prefers to be independent. Somewhere along the way we're trading a freedom here for a ‘protection' there. I just think there's got to be a better way.
AB5 Shouldn't be the ONLY Fix to the Problem.
I don't like that it boils down to either pass AB5 or nothing gets fixed at all.
I speak often about the issues I have with how these gig companies work. I do believe that they exploit people who are unaware of what it means to be independent contractors. People walk into this thinking like an employee. Companies try a lot of sneaky, underhanded and manipulative things to try to force or trick people into thinking and acting like employees. It's a problem.
But why does MAKING them into employees have to be the only solution?
In the end, AB5 is better than doing nothing at all. I'm just concerned that we aren't thinking through the unintended consequences. I'm concerned that we haven't explored all the options.
Is it not possible to require gig companies to better educate their couriers on what it is to be a contractor? Is it not possible to have contractors sign off on what they are getting into, item by item? Why can we not do something to better police the over-reaches that companies make into controlling contractors?
I am concerned about what this can do to Entrepreneurship.
I've seen a number of journalists who write in favor of AB5, and yet these journalists are freelancers. They write for a number of publications. What would you think of being forced to be an employee? One in particular has written often about how we should just not have a distinction between employees and contractors. I've tried contacting her a few times asking if that means she would be okay being an employee of all the publications she writes for. After all, as a freelance writer, she's in the same boat. She's never responded.
See, there's a problem here. With AB5 you can be in some professions and remain as an independent contractor. Other professions, you can't. There's an equity problem with that. I can be a contractor as an accountant but I can't as a courier? Do you see the problem with this?
My other concern is that if you force people to become employees in some areas, is there a slippery slope that can affect people in others? Is it going to be harder to start a business if that business is in a profession that is considered an employment profession? Is it eventually going to just make it harder to run a business, period?
I think the bottom line is, I'm concerned that this is creating some control in areas where we are going to need more flexibility. I'm concerned that laws that are meant to protect people will end up inhibiting the ability to go into business for one's self.
I would prefer finding other alternatives.
It's too late for that in California. I don't know, maybe there aren't any other alternatives. I'm just concerned about when a regulatory approach is pushed as the only possible answer to a problem.
My concerns don't erase the problems that exist. Despite the concerns, I have to say that if there are no other alternatives, AB5 is probably necessary. In the next article in this series, I'll get into why I think that. Below is a list of the other articles in the series. As the future articles are published I'll come back and update the links. If I remember.