Gig/freelancer economy roundup

More on the chaotic, destructive effects of California’s AB5 (earlier here, here, etc.):

8 Comments

  • Solution in California? Can’t all these self-employed people”/independedn contractors” incorporate and sell their services throught their corporation?

    • Yes, self-employed people can incorporate and sell their services through their corporation.

      However, in CA that costs considerable money and time, fees to file the incorporation, annual fees to maintain the status, another layer of accounting and bookkeeping, two sets of state and federal tax forms to file, one for the corporation and one for the individual who was once self employed, etc.

      Those costs of money and time are just the first ones that came to mind.

      Decades ago, in days of yore, I was an independent contractor in a field which required no professional license or union membership, and which paid well. Every financial advisor I spoke to advised not incorporating for the reasons above, and for many other reasons I don’t even recall nowadays.

      The primary reason for incorporating at the time was to avoid personal liability for professional errors or malpractice. In my situation that was not a compelling reason to incorporate.

  • A couple more examples. Churches hiring organists to play a couple of hours every Sunday having to switch to employee status. A concierge medicine practice that includes sending phlebotomists to clients’ homes requiring them to get incorporated if they want to continue (BTW, California requires all corps. to pay a minimum of $800 income tax, even without a profit). Newspaper carriers to now be required to be employees. The LA Times publisher wrote an article saying this would seriously hurt them and limit their ability to investigate President Trump.

    • First Amendment issues.

      • Precedent is generally not favorable for First Amendment challenges to generally applicable labor laws in the absence of some indication that the laws were, e.g. motivated by a wish to harm the press or some speakers. Cornell LII annotated Constitution:

        https://www.law.cornell.edu/constitution-conan/amendment-1/freedom-of-expression-speech-and-press

        “Just as newspapers and other communications businesses are subject to nondiscriminatory taxation, they are entitled to no immunity from the application of general laws regulating their relations with their employees and prescribing wage and hour standards. In Associated Press v. NLRB the application of the National Labor Relations Act to a newsgathering agency was found to raise no constitutional problem. “The publisher of a newspaper has no special immunity from the application of general laws. He has no special privilege to invade the rights and liberties of others. . . . The regulation here in question has no relation whatever to the impartial distribution of news.” Similarly, the Court has found no problem with requiring newspapers to pay minimum wages and observe maximum hours.”

        There are to be sure some ways in which the operation of labor law can come under First Amendment scrutiny, as when it forces or forbids speech (which it sometimes does whether or not the employer is a publication). But the contractor/employee distinction may not be easy to fit into that mold.

        Constitutional law aside, if AB5 endangers many independent press outlets, as I believe it does, that is a strong practical reason for those who value having an abundance of independent press voices to feel a sense of urgency about working for the law’s repeal

  • I wonder how this will affect independent truck owner/operators. This is a large and thriving field. Were it to suddenly vanish into the preexisting large corporations, I would foresee the costs of shipping to rise significantly.

    • From what I’ve read, there is already a California state court decision that AB5 does not apply to independent truck owner/operators due to preemption by federal law/regulations.

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