As Richard Weaver noted in his famous book, Ideas Have Consequences, good intentions often lead to unintended consequences. This has been the case with the proposition of Assembly Bill 5 by Assemblywoman Lorena Gonzalez.
The bill originally sought to protect workers in the gig economy operating under companies such as Uber or TaskRabbit. Yet, in actuality, it will inevitably create huge disruptions for Californians working in franchise industries. The issue is rooted in the broadness of the bill, which will cause severe unintended consequences for small businesses and over 700,000 franchise jobs in California.
AB 5 includes sections that require employers to prove that workers “perform work that is outside the usual course of the hiring entity’s business.” Nonetheless, this is troubling since the very basis of franchising is licensing trademarks to create a replica of a brands business model.
The bill will slow down the hiring process, stop small businesses from expanding, and limit the use of business models that have proven to be profitable for employers and workers. Also, the bill would demote franchise owners to franchisor employees, which would cost these owners years of hard work and profit.
There are some specific exemptions in the bill that Democratic lawmakers have suggested will reduce its impact, with simple precautions, limiting the burden on more than 80,000 businesses. But if AB 5 was good policy, why would such extensive exemptions be necessary?
Despite its ostensibly praiseworthy intentions, the bill is shortsighted and will have major consequences for businesses and workers throughout California. As the saying goes, “the road to hell is paved with good intentions.”
