California begins the Freelance Apocalypse
You have likely heard of California’s AB5 by now. You know the new law that has changed the test for who qualifies as an independent contractor making an estimated 1 million freelancers employees as of January 1, 2020, according to an International Business Times article. Most assume that this law was ushered through the California legislature with little through for the fallout. Which, seems to be the case, but it was the law of the land before the bill was signed due to a California Supreme Court decision in the Dynamax case.
That decision changed the law, the rather rushed bill just applied further parameters, fines for lack of compliance, more bureaucracy and carved out exceptions for some (lawyer, doctors, realtors, HR professionals), and left many others wondering what the fu$k they are supposed to do now (fitness trainers, truckers, pilates instructors, musicians, photographers, a large majority of writers).
I work with online business owners varying from service providers to the course and content creators to straight-up creatives. All of these businesses thrive and survive on collaborative work with independent contractors. Most of my clients are moms who opted for more freedom for their family and took to the internet to carve out a living. Now, these same businesses that allow women to make choices about their child care and children’s schooling are facing either an increased workload, increased overhead or potentially the closing of their business.
I have been fielding calls for weeks from freelancers and business owners alike asking the same question ‘what do I do now’. Out of state businesses are choosing to cut ties with California freelancers. Businesses within California are also ending their relationships with freelancers, requiring them to either apply for positions as employees (where they will get paid less and lose a lot of the tax benefits of running your own business), or their contracts are just ended.
The thing that hasn’t been considered is how much this hurts freelancers who love working that way. As a freelancer you set your own hours, take on work as you choose to, experience the tax benefits that come with owning your own business and own your intellectual property (if your contract is written well by an awesome lawyer like me). As an employee, your intellectual property belongs to your employer. A consequence that obviously wasn’t considered by the legislature.
The termination of contracts for hundreds of Vox Media freelancers this week is the beginning of a landslide for freelancers in California. I have one question for you guys…..where are we moving??
If you need more information on AB5 and how it may affect you and your business I have other resources on the topic.
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Emily D. Baker, Esq.
Badass Lawyer for Online Business
Emily has been running business for 15 years and has ove 13 years of legal experience. She spent 10 years at the Los Angeles County District attorney's office where she truly learned to be a solopreneur. Emily has built her consulting and speaking business from the ground up, in her garage jamming out to 90's music. She specializes in no BS practical advice for the starting and scaling online entreprenur. Emily will tell you what the business gurus can't in a way that is both hillarious and empowering.