The state’s strange impulse to basically kill the thriving gig economy has taken a turn against smaller businesses. It now appears bigger businesses are selling them out.
It all started last year with the California Supreme Court’s decision in the so-called Dynamex case. That basically outlawed the use of independent contractors, ending the longstanding rules of hiring such workers and putting real fear into such big businesses as Uber and DoorDash, smaller businesses that routinely hire someone or some company to perform a task, and the gig workers themselves, who rightly fear their freelance way of making a living is in jeopardy.
The legislature – you’d hope it’d shackle or even kill the Dynamex decision – instead proposed a bill that embraces it. Called AB 5, it codifies the principles of the court decision, saying businesses for the most part can’t use independent contractors but must hire such workers as employees. It carved out a few exceptions, such as for doctors, insurance agents and securities brokers and advisers.
Alas, a coalition of business groups, led by the California Chamber of Commerce, rather than fighting the bill on principle, has signed on to it with the provision that there be additional exemptions. Among those proposed exemptions: professionals such as architects and lawyers; “direct sellers” such as “drivers in the gig economy”; and some business-to-business arrangements, such as restaurants that contract with a delivery service. (I suppose it’s just coincidence that the proposed exemptions go to the most influential professionals and big businesses.)
The author of the bill has indicated she’s open to negotiation but won’t accept all of the proposed exemptions.
So that’s what it’s come down to. The business groups have given up the fight on principle and are negotiating the terms of surrender in a way that benefits bigger businesses.
The likely result: big businesses that can afford lobbyists will get their carve outs and smaller businesses won’t; legislators will enjoy the fruits of all that lobbying; and a monumentally confusing system will be created in which some businesses and industries can hire some independent contractors and others can’t.