Why the gig economy is in danger

California’s new law will restrict freelancers and independent contractors – including those who work in technology – and other states follow this example.

These are the top technology freelance jobs
TechRepublic’s Alison DeNisco Rayome lists the most requested skilled jobs for freelance tech employees.

California residents who rely on the once thriving gig economy and culture are finding freelance work increasingly difficult. And it is something that ambitious Californians, who also want a flexible freelance schedule, have to take this into account, because change is coming soon.

And while those who freelance outside of California may feel relieved that they are “safe” (not to mention getting the overflow of work that used to go to Californians), other states have the same laws. New Jersey, New York and Illinois are considering tackling the misclassification of employees as independent contractors.

Adopt the law

California Gov. Gavin Newsom signed Assembly Bill 5 (AB5) in Law September 18, 2019, which codifies and builds on the “Dynamex decision” of the California Supreme Court of 2018, making it more difficult for companies to classify employees as freelancers instead of employees. They were incorrectly classified as “independent contractors” instead of employees.

The intention, as many believe, was good. Too many companies had hired freelancers to do the work of full-time employees, but without the benefits of health insurance or PTO (free time).

SEE: The gig economy: a guide for insiders (free PDF) (TechRepublic)

It’s about the Benjamins

Millions were promised by Uber, Lyft and Doordash (the primary targets for AB5) for a vote to enable them to continue to qualify drivers as independent contractors. But
while the companies are not profitable
, there is a lot of money behind Uber and Lyft. It is conceivable that these companies can pay the AB5 ruling.

Conversely, newspapers and sheets fold its shutters (eg, Dozens of Sports Illustrated employees were fired to be replaced by freelancers, albeit not California freelancers). If you were dependent on a performance in California for writing / editing / photography, you will probably have to supplement your income with something else.

Upwork’s 2019 Freelancing in America survey reported that 57 million US freelancers contribute a surplus of $ 1 trillion to the economy every year.

Reclassified information

The new law in California, effective January 1, 2020, requires companies to reclassify contract, freelance, and conditional employees as full-time employees eligible for benefits, a guaranteed minimum wage of $ 12 to $ 13 and protection under the labor law of the state.

The employer must deduct social security and Medicare taxes from the costs of the freelancer and contribute to the employee and unemployment insurance. It will be a damper for what freelancers can use as a tax deduction.

And this is not a matter in one industry, despite the initial reaction that it is all about freelance writers.

“Creatives” get a pass

Although about 20 jobs are exempt from the law, including “creatives” (artists), travel agencies, fishermen, stock brokers, accountants, architects, doctors, insurance agents, lawyers, gift writers, real estate agents, teachers, truck drivers and manicure , many people who act will seriously reduce their income.

A brief overview of the Upwork vacancies includes the following
freelance technical opportunities
, including, yes, tech writers, but also DEV-OPS engineers, IT network problem solvers, web scrapers, developers, project managers, Python developers, IT help desk support, SEO staff, full-stack engineers, digital marketing specialists, SEO site auditors, webflow developers, front-end developers, technical marketers, iOS developers, link builders, tech pack designers, angular developers, Django developers, Google tag managers, Google analysts, React developers and Ab Initio developers .

Although Massachusetts has a long-standing 1990 statute on which California law was based, the most Western American state has a profile that apparently is high enough for a freelancer to arouse alarm and concern.

The ABC test

California had previously applied a 10-factor test, often distilled into one core factor, the “right to control,” explained Danielle Lackey, chief legal officer, Motus, developer of mobile compensation software management to help employers with costs and IRS compliance.

“Although all 10 factors were evaluated, this test strongly emphasized whether a hiring entity or a contractor had control over the means used to accomplish their work to determine whether someone was an employee or an independent contractor.”

The new law contains what they call an ABC test established in the California Supreme Court ruling in 2018. Lackey said, “The Dynamex ABC test considers all employees to be employees unless the hiring entity can prove that the employee in question meets all three conditions:

A. The employee is free from the control and management of the hiring entity when performing the work (both under the work execution contract and in fact).
B. The employee carries out work that does not fall within the normal course of the business activities of the user company.
C. The employee has an independently established company that provides the same services to others. “

New Jersey and New York

Lackey said, “Last month, New Jersey introduced Senator Stephen Sweeney S4204. This bill closely resembles AB5,” and added, “New York State senator Diane Savino and assembler Marcos Crespo also recently introduced a new bill for classification. would have created employment for workers in a gig economy called ‘dependent workers’ who have the right to organize and to negotiate collectively.

“It would also have given these ‘dependent workers’ protection against pay theft and archiving requirements. Although the bill has stalled, they will undoubtedly look further into the issue of drafting new legislation for the next 2020 session – which may look more like AB5 ”

California freelancers throw a bone

Meanwhile, AB5 in California decided that freelance writers, photographers, editorial cartoonists and editors could be hired by publishers for up to 35 separate “content submissions” per year.

Initially, the authors of the bill only wanted 25 or less per year, and the freelancers worked with 52 before settling on 35. They agreed that, for example, if a technical writer treats SXSW, for example the articles they produced could be bundled and considered a single entry. Interestingly, graphic designers have a complete exemption.

Chane Steiner, CEO of the Crediful credit repair training site, admitted that the law is “a blow to the freelance world” since “freelancing offers flexibility that normal jobs do not offer”.

This new law hinders the choices freelancers can make without being ’employed’. Employers will need things other than those they consider in the books, as opposed to those hired for one-off appearances, “added Steiner.

And, as far as Steiner is concerned, things don’t look good for California freelancers because it means “no longer working with independent contractors or freelancers in California. My preference is for stability for my employees, but freelancers offer stability for some, the company to keep it going and to enable gig workers to maintain their autonomy and flexibility. California legislation can hinder that. ”

For more information, view the 10 best cities for freelance employees at TechRepublic.

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