Here's How AB5, California's New Freelancer Law, Could Affect You
A new state law is about to rewrite the rules of freelance and gig work in California, causing confusion among the many workers who earn their living as independent contractors in the Los Angeles creative economy.
Workers as varied as musicians and photojournalists could be affected by AB5, which takes effect Jan. 1.
UPDATE: Feb. 7 | CA Freelancers May Get A Break After Tough AB 5 Limits
The law codifies a 2018 California Supreme Court decision that introduced strict new rules governing the legal definition of independent contracting in the state. In short, more companies will be pushed to classify their workers as employees.
Much of the discussion leading up to the passage of AB5 focused on gig companies like Uber and Lyft, which have fought employee status for their drivers. These companies can save an estimated 30 percent on labor costs by classifying their workers as independent contractors. With some California gig economy workers now earning less than minimum wage, proponents of AB5 hope the law ends what they see as systematic worker misclassification.
But platforms like Uber and Lyft represent just a fraction of California's independent contractor workforce. In a city like Los Angeles, contract workers are also hustling to make it in the music industry, get published as freelance writers and pick up newspaper photo assignments.
On the eve of AB5 going into effect, here's a breakdown of how some jobs could change in 2020.
Kristen Lopez covers entertainment for outlets like Forbes.com, Remezcla, Fansided and Zimbio, among others. After writing from Sacramento for years, she took the plunge and moved to L.A. one year ago to be closer to the entertainment industry.
But now she's worried her freelance work could dry up as a result of AB5.
"I haven't talked to a lot of my outlets about this because I'm terrified of what they're going to say," Lopez said.
The law allows writers to keep freelancing without changes -- up to a point. If writers submit more than 35 articles a year to any given outlet, they would need to be hired as an employee.
Lopez said she contributes much more than 35 articles a year to the sites that make up the bulk of her income. One outlet has already told her she'll have to stay below the cap in 2020, unless she can set up a corporate structure that satisfies the law's "business-to-business" exemption.
Lopez fears that other outlets may decide to sever ties with her and other California-based freelancers entirely, to avoid the risk of non-compliance with AB5. Hundreds of freelancers in California have already been dropped by clients like Vox Media.
Assemblywoman Lorena Gonzalez, the author of AB5, has said the law "seeks to eliminate exploitive permalance positions not legitimate freelance opportunities." The term "permalancing" refers to open-ended, non-benefited contract positions that some say have replaced work typically done by employees.
In order to comply with AB5, some outlets have turned regular freelance contributors into part-time employees. But Lopez said even if she were offered a full-time job, her disability would preclude her from taking it.
Lopez has brittle bone disease and uses a wheelchair. She receives cash assistance through Social Security and gets specialized medical treatment through her Medi-Cal coverage -- resources that she said would be jeopardized if she took a traditional job.
"The job market is already uneven if you're a disabled person, and freelance writing is the one place where I don't feel limited by my disability," Lopez said. "I want to care for myself. And that's what this job allows me to do."
A group of freelancers is now fighting back. Organizations representing freelance journalists and photographers are suing the state, arguing that AB5 seeks to limit their free speech rights under the U.S. Constitution.
Freelance writers aren't the only ones subject to AB5's submission cap. Photographers also can't contribute to any outlet more than 35 times per year without triggering the law's employment provisions. The National Press Photographers Association has joined the lawsuit against the state.
Spencer Grant is an Orange County-based freelance photojournalist who is already feeling the effects. He estimates he picks up between 90 and 100 assignments each year from his main client, the Los Angeles Times. Grant said the Times has already contacted him to let him know they plan to abide by the 35 submission cap.
"So as far as I can see, my workload is being cut," Grant said. "And there's nothing I can do about it. I'm very sad because I really enjoy the work."
At 75, Grant doubts any outlet would hire him full-time. He also needs to maintain a flexible schedule so he can help his wife with her medical problems.
"I am her caregiver. And a full-time job would simply get in the way of being a loving and supportive husband," Grant said. "Let's face it, that comes first."
Before the word "gig" became synonymous with platforms like Uber, it belonged to musicians. Work in the music industry often comes piecemeal, with formal employment almost nonexistent.
But some musicians worry that AB5 could complicate the constant collaboration that props up their careers.
Need a drummer for your album recording sessions? Hiring a producer to mix your tracks? Looking for a venue to play your album release show?
Attorney Ned Menoyo, who works with indie musicians on the legal side of their careers, says AB5 could subject all of those relationships to the standards of traditional employment. That means withholding payroll taxes, issuing W2s and complying with all of the state's wage and benefit laws for employees.
"I think it's actually not workable," Menoyo said. "It will actually cause harm to the largely struggling class of independent musicians in L.A."
It still isn't entirely clear how gigs in the music industry could change. For instance, if a band plays an hour-long set at an L.A. club, would the venue have to put them on the payroll for that night? Menoyo said by the letter of the law, they might.
But it could depend on whether concerts are part of the venue's "usual course of business." If the venue could convince a judge that their business centers on selling food or alcohol -- and that the band playing up on the stage is only incidental to that business -- they may not have to make any adjustments. But these arguments have yet to be tested in court.
Realistically, many indie musicians are unlikely to change their hiring or billing practices. For musicians trading very small amounts of money, it doesn't seem practical to follow all of the state's employment regulations every time they need someone to record a backing vocal.
Many hope that the state won't single out their corner of the creative economy for strict enforcement of AB5. But Menoyo said that approach is a gamble.
"The fear I have for the L.A. music scene as a whole is that L.A. is not the only place you can be a musician," Menoyo said. If artists see complying with California employment laws as too much of a hassle, they could move to another music capital to build their career.
However, Menoyo and others in the music industry are hoping some clarity could come through new legislation next year.
Assemblywoman and AB5 author Gonzalez said on Twitter earlier this month, "I have said from the day of the vote that we are continuing to work on the musicians issue. There was language that was supposed to be coming from a stakeholder group last August, but no agreement could be made. We will take on the musician issue to add clarity."
FILM AND TV WORKERS
Unlike the music world, Hollywood's established film and TV industry is heavily unionized. Labor leadership has reassured entertainment workers who belong to various guilds that AB5 shouldn't change how they earn a living.
Officials with unions including the Screen Actors Guild, the Writers Guild and the International Alliance of Theatrical Stage Employees put out a statement earlier this year, saying, "Members of our guilds and unions are not independent contractors; they are employees."
However, not all entertainment workers belong to unions. Attorney Ned Menoyo said artists working on a more independent level could run into some of the same problems as musicians moving forward.
THE STARVING ARTIST'S SIDE HUSTLE
Of course, many creative workers in L.A. aren't able to cover their rent by doing what they love. Earlier this year, LAist spoke to an up-and-coming stand-up comedian who pays her bills by driving for Lyft.
Like many performers chasing their big break, Madison Shepard liked the flexibility provided by gig platforms. When she lands an audition or books a stand-up set, she can turn the app off and go pursue her passion -- whereas more traditional jobs would've kept her schedule locked in.
Some L.A. rideshare drivers are looking forward to the perks of employment, including a guaranteed minimum wage, paid sick time and healthcare benefits. But drivers are split on the issue, with some fearful of the limitations that could come with more traditional employment, like a cap on weekly hours or demands that drivers work during specific windows of time.
None of these changes will happen right away, though. Uber's legal team has said that it does not believe AB5 applies to their drivers, because the company does not consider drivers a core part of its business, and does not plan to comply with AB5 right away.
The company, along with food delivery service Postmates, launched a lawsuit this week. It has also joined Lyft and DoorDash in a $90 million effort to get an initiative on the Nov. 2020 ballot that would avoid employee status for their workers.
JOBS THAT SHOULD BE IN THE CLEAR
Not all creative workers will have to adjust to the new law. AB5 exempts many jobs from the new, stricter employment standards. Graphic designers, fine artists and marketing professionals are among those who can maintain their independent contracting relationships with clients.