I love you, California. I love your beautiful state and your great people.
But your state legislators are killing freelance businesses by enacting radical, poorly conceived legislation that’s funded and supported by special interests and not you—the citizens.
The new AB5 law makes it very difficult for businesses to hire California independent contractors. In many cases, the client can only hire you as an employee, not an independent contractor.
The net result is that companies everywhere are terminating their contracts with California freelancers.
Reportedly, thousands of independent contractors are being let go and are unable to find freelance work.
Similar legislation is in the works in a number of states, especially union-heavy states such as New Jersey and New York. And there’s a bill in Congress (the PRO Act) that’s very similar to the AB5 law.
It’s not all bad news, however. There is hope. As of this recording, it looks like the California law might get amended to include better exemptions for writers and copywriters.
Most importantly, we still have a voice. It’s imperative that we each call our representatives in Congress and in our state government and speak up against these radical measures.
In this podcast episode, I bring in two experts to shed light on the AB5 fiasco and what’s happening in the rest of the country: Liz Steblay, founder and chief advocate of the Professional Independent Consultants of America (PICA), and Henry Telfeian, general counsel for PICA.
This is a very important issue for self-employed service professionals. So if you live anywhere in the U.S., I urge you to give this episode a listen and do your part to ensure you are protected AND to prevent this disaster from spreading to the rest of the country.
The notes that follow are a very basic, unedited summary of the show. There’s a lot more detail in the audio version. You can listen to the show using the audio player below. Or you can subscribe in iTunes to get this show delivered straight to the Podcasts app on your smart phone, tablet or iPod.
Tell us about yourselves and the kind of work you do
Liz Steblay has been a management consultant most of her career. She started with a big firm and moved into independent consulting in 2004. She founded PICA (Professional Independent Consultants of America) to help people launch and grow their own consulting practices a couple years ago.
Henry Telfeian graduated from Harvard Law in 1976. He started in labor law and branched into employment law as it became increasingly important. He worked for a number of firms and eventually started his own practice. Today, has clients in addition to working as general counsel for PICA.
A hot topic in my tribe right now is the new AB5 labor law in California. Could you recap what brought this law about?
Under the law in most states and federally, you’re considered an independent contractor (and not an employee) if you’re free from the control and direction of the hiring entity. In other words, the person hiring you doesn’t tell you how, when and where to do your job.
But two years ago, the California Supreme Court applied a different test (of contractor vs. employee) to a specific case that was before it.
There was concern that this new test would apply to other laws, such as workers compensation. No one knew, so lawyers advised their clients (as employers) to assume that California courts would apply this test across all of California to all employment laws.
The new test is called the ABC test or Dynamex test, and it consists of three parts.
The “B” part of this test says that you’re NOT an independent contractor unless you perform work that’s outside the usual course of the hiring entity’s business.
This means that content marketers and copywriters COULD be considered employees —because businesses couldn’t survive if they didn’t educate customers and prospects about their products and services. It’s integral to their business.
But that’s just a guess. We won’t really know until a court decides the question.
The “C” part of this test says that you have to be customarily engaged in an independently established trade or business.
In other words, if you work for only one company, and you don’t have a website, telephone number and all the other things you’d normally have as a business, then you’re not in business. You’re an employee.
What can we do about the “C” part of the test?
PICA has a list of 14 things you can do to show that you’re an independent business, such as getting a business license and setting up a website.
How does the California AB5 law fit into all this?
Once the Dynamex test came into being in California, a lot of employers were concerned that their contractors would now suddenly be considered employees under the law.
A lot of pressure was put on the legislature to clarify where the Dynamex test would apply. Unions and trial lawyers wanted more people to be employees so they could increase union membership and sue employers for violating the law. The California legislature gets a lot of contributions from unions and trial lawyers and the bill leaned toward their position.
AB5 carves out some exceptions. As long as you fall under the exception (and can illustrate that you conform to the original test of being free of control from the hiring entity), you’re considered an independent contractor.
One exception category that was included is freelance writers.
However, the exception sounds like it applies to writers who write for publications, not for commercial writers. Everything depends on how a court will interpret it, and we won’t know until it’s litigated.
In the meantime, lawyers are telling their employer clients to steer clear.
What are writers doing in response?
Some groups have filed lawsuits arguing that the law doesn’t apply or is unconstitutional.
Writers are trying to do the same but, so far, they haven’t been successful in getting an injunction. The law still applies.
A lot of pressure is being putting on the legislature. The author of the legislation has agreed to look at it again and see how it can be clarified.
From a legal perspective, we’re in wait and see mode. But people are mobilizing.
The Facebook group Freelancers Against AB5 has over 10,000 members.
This isn’t just a California issue because other states have similar legislation pending.
The AB5 law isn’t just a California issue. Other states have similar legislation pending!
If you’re a company based in California hiring a freelance writer in California, then this law applies. Correct?
Yes.
If you’re a company in California hiring a freelance writer located outside of California, does this law apply?
Probably not, but we don’t know for sure. Generally, the laws of the area where the work takes place apply. But again, we won’t know for sure until a court issues a ruling.
Where do you think this situation is going?
It depends on whether you’re in a Democratic or Republican controlled state. Democrats see the Uber/Lyft model as exploitative. So this is the future.
Republican controlled states don’t think these employees need protection. In their view, as long as you can pass the original test of being free from the control of the hiring entity, then you should be considered an independent contractor.
The House of Representatives has passed legislation that’s similar to AB5 but the Senate won’t pass it. But this could all change in the 2020 election.
AB5 will be amended because there’s so much pressure. Freelance writers will likely get a better exception. But what that will look like and whether it will apply to commercial writers is unclear.
The law is unlikely to be reversed, but there are movements to make it less harsh.
What we can do to help the situation?
Don’t wait for something to impact you, get involved now.
Don’t wait for your state to enact laws that are similar to AB5. Voice your displeasure now!
Join the Facebook group and contact your local representative.
If you’re in California, contact the author of the AB5 bill, Assemblywoman Lorena Gonzalez and express your displeasure with this law. Let her know that this law is hurting your ability to make a living as a freelance writer, and you’re not interested in being an employee.
Call and send paper mail. These grassroots tactics can work.
Where can listeners learn more about this law?
Henry is conducting webinars on the topic every month that are free for PICA members.
Henry’s next webinar and Q&A session is April 28.
Don’t kick the hornet’s nest. If you’re lining up work and the client doesn’t mention AB5, you don’t have to bring it up.
You will have a better shot at being an independent contractor if you look like a business. Start working on this now.
Additional resources:
For Californians:
- Call, fax or write to Gov. Gavin Newsom’s office and tell him to sign AB-1928, a 100% repeal of AB5 because it threatens your livelihood as a self-employed professional.
Governor Gavin Newsom
1303 10th Street, Suite 1173
Sacramento, CA 95814
Phone: (916) 445-2841
Fax: (916) 558-3160
- Call and send letters to your state legislator. Hard copy letters or postcards are harder to ignore, especially in massive quantities. You’re not trying to get a response, you just want to make an impression. Some sample text:
Hello.
I live in your district and I urge you to join the fight against AB5 and support AB-1928, the repeal of AB5. I’m self-employed and AB5 threatens my ability to make a living! I choose to be self-employed and I have the right to earn my living on my own terms as a small business.
Sincerely,
Print a few dozen letters at a time and a sheet of mailing labels. Drop a letter in the mail every few days.
Find out who your California State Legislator is: http://www.legislature.ca.gov/your_legislator.html
A list of the California State Assembly members with addresses: https://www.assembly.ca.gov/assemblymembers.
The California Freelance Writers United group: https://cafwu.org/
For people outside of California:
If you’re in a Democratic state other than California, similar legislation is coming your way! Search on “who is my legislator <New Jersey>” or “current list of <New Jersey> legislators” and send them letters too.
Most importantly, VOTE! Many legislators are up for re-election. Make sure you know where they stand on this issue before you cast your ballot! An article on California’s AB5 law:
An article from California Freelance Writers United about the recent bill, AR2474, passed by Congress:
Plus… whenever you’re ready, here are 4 ways I can help you grow your freelance business:
- Grab a free copy of my book for ESTABLISHED writers/copywriters.
You’ll discover how to quickly and predictably reawaken dead leads, generate new client opportunities and convert not-yet-ready prospects into freelance writing clients. — Click Here
- Download a free copy of my new book for writers who are NEW to freelancing.
I’ll show you the 3 things you need to do to get your business off the ground safely and land your first paying client faster. — Click Here
- Join my implementation program and be a case study.
I’m putting together a new implementation group this month. If you’d like to work with me to grow your income quickly with better clients (and become one of my new success stories) … just email me at [email protected] … put “Case Study” in the subject line and I’ll get back to you with more details.
- Work with me privately.
If you’re a 6-figure writer who’s trying to earn more in less time, with less stress, I might be able to help you get there faster than you think. Email me at [email protected] … put “Breakthrough” in the subject line and I’ll get back to you with more details.
