Written by Ainsley Jackman
Renewed debate on AB 5, a bill written by Assemblywoman Lorena Gonzalez requiring companies to hire workers as employees instead of contractors, has arisen amid unemployment concerns due to the COVID-19 pandemic.
Passed last year, the law affects businesses in numerous industries, including driving, freelancing, manufacturing, construction, and teaching. Companies like Uber, Lyft, and DoorDash are forced to provide their workers with benefits such as paid leave, vacation, and healthcare at the expense of the employee’s flexible schedule, as the law restricts their independent contracting to the point of elimination.
Admittedly, such benefits may help some workers, but the reality is that majority of independent contractors choose this kind of work specifically for the flexibility that allows them to work how much and whenever they want—flexibility that no longer exists under AB 5.
Take Uber, for example. Over 62% of Uber drivers are working another job either full or part-time. For these folks, Uber is just a quick and easy way to earn some extra money to make ends meet when needed. In fact, the majority of Uber drivers work 15 hours or less a week, and only 19% are driving full-time.
Not only does this indicate that most drivers don’t want the locked-in schedule that AB 5 requires, and many would be required to quit one job or the other to make it work, it also means that the number of employees receiving benefits is far less than anticipated. Since only 20% of Uber drivers are working full-time, they would be the only ones the law requires to be offered major benefits like healthcare.
Uber CEO says the service may be forced to shut down in California if judge's ruling making them classify drivers as employees is upheld.
CA law #AB5, written by @LorenaSGonzalez, forces companies to hire workers as employees rather than contractorshttps://t.co/vArcAS4GYg
— KUSI News (@KUSINews) August 12, 2020
All of this doesn’t even consider the effects of AB 5 on the actual company—and, predictably, they aren’t good. With fewer employees and a sudden requirement to offer them all expensive benefits, it’s no wonder that Uber CEO Dara Khosrowshahi said recently that they might have to shut down in California if AB 5 is upheld. The law essentially made their business model illegal, after all.
The impacts of businesses like Uber and Lyft leaving or downsizing at a time like this would be predictably disastrous, only worsening unemployment and poverty rates when they are already at a massive levels. It’s not obvious whether laws like AB 5 are passed due to anti-business bigotry or just sheer ignorance, but it’s clear that once again, we will be the ones paying for the mistakes of Democrats.
