Freelancers Fear California’s New Gig Worker Law Will Wipe Them Out

By Michael Hiltzik Los Angeles Times

WWR Article Summary (tl;dr)  Some California freelancers are concerned that the new law which tightens the rules for when a gig worker must be considered an employee will discourage employers from out of state from hiring them to avoid the paperwork and any legal liabilities.

Los Angeles Times

John Conroy's first glimmer of California's new approach to freelance journalists came last fall, when an editor at a travel publication that provided a large share of his income abruptly informed him that its parent company would cease using California-based freelancers.

"That cost me several thousand dollars of much-needed income," says the Los Angeles writer, 67. He's making do, barely, on Social Security benefits and savings, but otherwise is "hanging on by my fingernails."

Freelance writers and photographers in California are in a panic that Conroy's case is the canary in the coal mine that signals a sharp contraction in their opportunities for work.

The initial blow, and the trigger for the employer's decision in Conroy's case, was the California Supreme Court's so-called Dynamex decision of 2018, which tightened the rules for when a worker must be considered a company's employee rather than an independent contractor. But what's generated more angst among the freelancers in journalism is Assembly Bill 5, a statute enacted this year that codified the Dynamex decision and expanded its reach.

AB 5 specifically exempts about a dozen work categories from its provisions, such as doctors, accountants, fishermen, stockbrokers and travel agents. But not journalists. Writers and photographers who submit more than 35 published works per year to a publisher must be treated as an employee of that publisher.

In practical terms, that means the publisher must deduct Social Security and Medicare taxes from the contributor's fees and contribute to workers' compensation and unemployment insurance on his or her behalf, among other responsibilities. On the writer's side, employment status makes it harder to take tax deductions for home offices, travel and equipment.

Although every employer located in California is subject to the law, freelancers fear that AB 5 will discourage more employers from out of state from hiring Californians to avoid the paperwork and legal liabilities implicit in the law.

They may have a point. Gig economy ride-hailing firms such as Uber and Lyft, the most prominent targets of AB 5, have no choice but to employ California drivers if they want to participate in the lucrative California market. (Uber says Los Angeles and the Bay Area are two of its three largest U.S. markets.) That's not true of the writing trade, which often can be pursued from anywhere.

"If I'm a publisher from out of state," says David Swanson, a San Diego writer who is the outgoing president of the Society of American Travel Writers, "and I have a choice of hiring a writer from California to do a job, or somebody from Colorado or Texas or Canada or India, and I'd have no chance of being sued, who do you think I'm going to hire? AB 5 simply makes it unattractive to hire writers from California."

Concerns about the impact of AB 5, which goes into effect on Jan. 1, have been percolating for months. But anxiety seemed to surge over the weekend, after an article in the Hollywood Reporter painted an especially dire picture of its consequences.

The harvest was a series of bitter exchanges on Twitter aimed at the bill's author, Assemblywoman Lorena Gonzalez (D-San Diego), including a tweet from Yashar Ali, a contributor to HuffPost and other publications, accusing Gonzalez of launching "a direct attack on press freedoms with her bill."

That's a wildly overwrought accusation that overlooks the clear virtues of AB 5, as well as the difficulties inherent in trying to draft a remedy to the well-documented abuses suffered by freelance writers and photographers at the hands of publishers unfettered by workplace standards.

One issue underscored by the controversy over freelancers is the wide variability of industries and jobs covered by AB 5. Uber and Lyft are wealthy (albeit unprofitable) companies that treat drivers as independent contractors, not employees. The Dynamex ruling and AB 5 arguably grant every driver workplace and wage protections as employees.

The news business, however, is shrinking, suffering mass layoffs and stagnant wages, but also still employs many full- and part-time staffers. AB 5's advocates in that industry see the law as a tool at least to preserve those jobs against waves of outsourcing.

But the law's critics say that it's naive to expect those employers to put large numbers of freelancers on staff to meet its requirements.

"Newspapers are laying off staff, including entire photography staffs, and newspapers are going out of business," says Mickey Osterreicher, general counsel for the National Press Photographers Assn. "Even though the best intentions here are to create more employees with benefits, that's not going to happen. Publications are not going to be hiring people."

Dynamex and AB 5 may have had some positive effect in the news business, but it's spotty. After the court ruling, The Times transitioned about 30 freelancers to full-time staff positions. The ruling and law also gave The Times' union negotiators some leverage in crafting provisions in a tentative contract governing freelancer use in the future, specifying situations in which freelancers can be assigned and in some cases limiting the duration of their assignments.

As it happens, just after Times employees voted to unionize in early 2018, indications emerged that its then-owner was creating a "shadow" newsroom of non-staff, non-union freelancers. The then-publisher of The Times, Ross Levinsohn, recently surfaced as a member of the management team at Sports Illustrated, where dozens of staff members are being laid off to make way for a cadre of freelancers.

Smaller newspapers and websites may not have much flexibility to put freelancers on staff. "The use of freelancers allows a small weekly or community publication to provide diverse voices," says Jim Ewert, general counsel of the California Newspaper Publishers Assn., which includes large metropolitan dailies and small local newspapers among its members. Ewart says that industry estimates place the cost of converting a freelancer to a staff position, even for a brief part-time assignment, at as much as 30%, chiefly in taxes and regulatory fees.

The issues about AB 5 raised by freelancers may also point to the limitations of states trying to enact wide-ranging social legislation on their own. Laws like California's are under consideration in New York and Illinois, and Massachusetts started clamping down on the misclassification of employees as independent contractors in 1990. But these rules would be more effective if enacted at the federal level, to prevent employers from evading them by shopping for workers in other states.

Exploitation is rife in freelancing, especially for writers and photographers in the early stages of a career. The abuses include late payments and nonpayment of fees and the misclassification of those doing staff-level work as independent contractors. In one notable 2011 case, an AFL-CIO-affliliated writers union won a $365,000 court judgment against a textbook subcontractor that had stiffed 36 writers, editors and designers after the project ended. (The company went out of business and never paid up.)

But defining a freelancer's work routine isn't easy. Some contribute occasional pieces to myriad publishers, some are regular content providers to only a handful of sources. Some contribute short squibs as often as several times a day; others, deeply reported investigations or features a few times a year. Among travel writers, Swanson told me, "no two of us have the same business model, so creating a carve-out that covers all of us is a fool's errand."

That difficulty became evident during the drafting of AB 5, when Gonzalez met several times with a coalition of freelancer groups. She was willing to offer a partial exemption to writers and photographers, but the question was where to set the line.

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