According to the LA Times, California’s Assembly Bill (AB) 5 is a measure intended to curb the widespread use of independent contractors across the state economy.
AB 5 could set a precedent in a national battle to improve pay and benefits for low- and middle-wage workers. It would change the employment status of more than a million Californians — including janitors, truckers, dog walkers, manicurists, coders and club entertainers, among many others. The bill moved closer to final passage at the end of August. This, in spite of Uber, Lyft and other gig economy companies mounting a fierce lobbying campaign to sidestep the measure’s reach.
In addition to club entertainers, AB 5 also has the potential to impact the wider adult industry.
We recently received the following coverage of even more recent movement with AB 5 via ACE — the Association of Club Executives. Read up, be aware.
The following has been copyedited lightly.
Sacramento, CA — California lawmakers recently rewrote the definition of “employee,” which could potentially shutter thousands of businesses across the state or increase operating costs by approximately thirty percent.
Assembly Bill 5 curbs businesses’ use of independent contractors and passed both houses on September 12. It was then sent to California Governor Gavin Newsom, who has publicly stated he supports the legislation.
Lorena Gonzalez (D-San Diego) told media outlets, “We will not in good conscience allow free-riding businesses to continue to pass their own business costs on to taxpayers and workers. It’s our job to look out for working men and women, not Wall Street and their get-rich-quick IPOs.”
Supporters of the bill… claim that many businesses who treat their workers as independent contractors do not guarantee a minimum wage, overtime pay, sick leave, family leave, unemployment or disability insurance, workers’ compensation or protection against discrimination or sexual harassment. Nor do those businesses pay into Social Security or Medicare for independent contractors. Yet, there has been little comment regarding the taxes, fees, licensing and legal fees these same businesses incur for the jobs they do provide.
Although the bill passed both houses along partisan lines — the Assembly at 56 to 15 and the Senate at 29 to 11 with Democrats primarily in favor and Republicans opposed — lawmakers have now raised concerns about how AB 5 will negatively impact businesses in their districts.
“California used to be a place where the entrepreneurial spirit was nurtured,” said Jay Obernolte (R-Big Bear Lake), who voted against the Bill. “If this is the thinking of the Legislature and this is the thinking of our governor, I really fear for the future of our state.”
The California Employee Test: Who Is Subject, Who is Exempt?
AB 5 codifies and expands on a 2018 California Supreme Court decision Dynamex Operations West, Inc. v. Superior Court of Los Angeles, which adopted a strict, three-part standard for determining whether workers should be treated as employees, which was modeled on a Massachusetts test.
According to lobbyists, California’s bill is now the strongest in the nation for classifying workers as employees. It gives the state and cities the right to file suit against companies over misclassification, overriding the arbitration agreements that many businesses use to shield themselves from worker complaints.
After months of lobbying by the California Chamber of Commerce and a host of trade associations, legislators carved out many exemptions to the new law, including real estate agents. In addition to real estate agents, AB 5 exempts doctors, dentists, lawyers, engineers, accountants, architects, realtors, travel agents, graphic designers, human resources administrators, grant writers, marketers, fine artists, investment advisors and broker-dealers from its test..
Some exemptions come with conditions. For instance, commercial fishermen are exempt except from unemployment insurance. Barbers, cosmetologists and manicurists are exempt only if they set their own rates, are paid directly by clients and schedule their own appointments. Salespersons are exempt, provided their pay is based on actual sales, rather than wholesale purchases or referrals.
Omitted from exemption are adult club workers and gig economy giants, such as Uber and Lyft.
[Note: The fact that some exemptions have been made while others are expressly mentioned (dancers) or ignored (other members of the adult industry including porn performers, cam and clips models, etc.) is interesting.]
Potential for National Impact
California is likely, they say, to set a precedent for other states and may bolster similar legislation now pending in Congress. Several Democratic presidential candidates endorsed AB 5. New York, this week, followed suit and introduced its own version of AB 5…
Meanwhile, in New York, Governor Andrew Cuomo said California’s passage of AB 5 “gets my competitive juices flowing.”
“I have proposed in the past and I will propose in the future, more protections for workers,” Cuomo told media outlets. “And part of that is redefining a worker as an employee, as opposed to an independent contractor.”
The Senate has already planned a public hearing for October 16…
For consumers, requiring employers to treat most workers as employees will result in higher costs, longer wait times and less service, particularly in low-income areas because the profit incentive would diminish.
Many Democrats frame the gig economy as a “gig revolution” and liken it to the Industrial Revolution that occurred more than a century ago, in which government was forced to step in and end child labor in factories, reduce work hours and create living wages, benefits and safety measures.
Erika is a sex positive people watcher (and writer). Email her at firstname.lastname@example.org.
Header image by Roberto Nickson via Pexels. ACE screengrab by the author.