The Daily Signal - California Freelancer Says She Questioned How She Would ‘Survive’ Under This State Law

Episode Date: October 16, 2023

A freelance writer and editor is speaking out about the negative effects of a recent California law, saying she questioned how she was “going to survive” after Gov. Gavin Newsom signed the legislation, known as AB 5.  “The law ... was signed … on Sept. 18, 2019, and when I woke up that morning and I read about it, you know, the next day, I thought, ‘This is going to be an existential threat to my career,'” recalls Karen Anderson, founder of Freelancers Against AB5, a Facebook group with over 18,000 members. “I’m not going to—how am I going to survive?” Anderson adds of her thoughts at the time. The website of the California Franchise Tax Board notes: “AB 5 is a bill the governor signed into law in September 2019 addressing employment status when a hiring entity claims that the person it hired is an independent contractor.” Anderson says she has worked for almost 25 years as a freelance writer, an editor or managing editor, and a photographer. She says she “started investigating” the state’s new law “and I realized that … it encompassed all professions.” “So golf caddies, videographers, photographers, nurse practitioners, whatever. So I thought, well, I want to find out how it’s affecting other people, not just me,” Anderson says of the law, adding: And so I started this public Facebook group just to see if I could hear some people’s stories and … sure enough, they started coming in in … November and December, people started losing their livelihoods overnight. Anderson, a participant in a recent Heritage Foundation panel discussion, is today’s guest on “The Daily Signal Podcast.” She shares the No. 1 takeaway of the California law with listeners and discusses what’s being done to change it. Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Daily Signal podcast for Monday, October 16th. I'm Samantha Charris, and joining us today is Karen Anderson, founder of freelancers against AB5. As I mentioned on Friday show, during an event here at the Heritage Foundation titled 21st Century Labor Policies to promote worker freedom, opportunity, and entrepreneurship, Karen was a member of a panel titled Why Protecting Independence is vital for opportunities and flexibility. Karen joins today's episode to discuss California's AB5 or Assembly Bill 5, which went into effect on January 1, 2020, her group freelancers against AB5, and more. We'll get to our conversation right after this. Virginia Allen here, I want to tell you all about a great way you can stay in the know on all the news the Daily Signal covers. Social media.

The Daily Signal has an active presence on Instagram, Facebook, and. Twitter. We are constantly posting news stories, clips from interviews, videos, and more across all our social platforms. Follow the Daily Signal on social media so you can get all the latest content from Reels on Instagram to video clips on Facebook and political commentary on Twitter. Today I have the honor of welcoming Karen Anderson to the Daily Signal podcast. Karen is the founder of freelancers against AB5. Thank you for taking the time to speak with us. Thanks for having me. So before we get too far into our conversation today, can you tell us just a little bit about yourself?

Well, I'm a third generation, Southern Californian. I have been a freelance writer, managing editor and professional photographer for almost 25 years. And I also, you know, my elderly mother, I had to kind of move back into the house to take care of her, you know, starting a couple of years ago, which coincided with the arrival of this new law. in California called AB5, which restricts independent contractors. And could you tell us a little bit more about AB5? From my understanding, when to affect January 1st, 2020. What is this law in its impact over the last few years? Well, it implements what's called the ABC test, which is a worker classification test,

and it's the strictest in the nation. So basically, the law says that everybody, no matter who you are, no matter what business you're in, is presumed to be an employee unless you can pass this ABC test. And most people can't pass it unless you're, you know, a plumber doing work for a department store or something like that. So what happened was that the author of the law did a lot of backroom dealing and granted a lot of exemptions to certain chosen few. And then a lot of other people across the vast swaths of professions, even before, the law went into effect in January of 2020 lost their livelihoods overnight. They were blindsided. They lost their clients that, you know, they were no longer able to operate as independent

contractors legally. They had to either be converted into employees, which is nine times out of 10. They're not, the company's not going to do that. Or you're just out of luck. As I mentioned at the top of the interview, you're the founder of the Facebook group, freelancers against AB5. Tell us a little bit more about this group, some of the people that are involved with it and some of their stories as well. Well, the law was signed in September on September 18, 2019. And when I woke up that morning and they read about it, you know, the next day and I thought, this is going to be an existential threat to my career. I'm not going to, how am I going to survive? I'm going to have to, you know, but then I started investigating it more and I realized that, you know, it, it encompassed all professions.

So golf caddies, videographers, photographers, nurse practitioners, whatever. So I thought, well, I want to find out how it's affecting other people, not just me. And so I started this public Facebook group just to see if I could hear some people's stories and then just sure enough they started coming in. you know, November and December, people started losing their livelihoods overnight. I mean, theaters were closing, festivals are shutting down, musicians couldn't perform because, you know, if you're a bar band, you had to make all of your players and employee, interpreters and translators were unable to work because they're mostly independent contractors or getting stories from sign language interpreters.

health care professionals. We had just all sorts of health care people who had to abandon their patients overnight. And I mean, the list goes on and on and on. You can't even believe the amount of professions that are impacted by it. I also wanted to ask you about, you know, obviously this law took effect, as we've been talking about beginning of 2020. And then, you know, shortly after that, we had the COVID-19 pandemic and all of the lockdowns. So, you know, what was the impact in California for, you know, independent contractors, small businesses, freelancers of both, you know, AB5 and COVID-19 lockdowns? And, you know, the impact of that combined.

Well, like I said, we started seeing community theaters and children's theaters and opera companies and dance companies. nonprofit arts groups and all sorts of, you know, independent filmmakers and opera companies and everything else, shutting down because of AB5, you know, beginning in November, then December, then the law went into effect and the floodgates opened. And the optics were really bad for the author of the bill, you know? I mean, it was a complete and total dumpster fire. And we had a lot of momentum in fighting it. You know, a lot of people were, but it was every man for himself. People were fighting for their own exclusive exemptions and carve-outs. And then the pandemic hit in April, and it obscured the big-picture collateral damage that would have been exposed to the general

public, you know, about all of the fallout from it. And nine months later in September, the author of the bill came up with a cleanup bill, AB 2257, that provided some more exemptions for chosen few, the loudest ones, you know, but still a lot of people have. fell through the cracks. And I want to say that the exemptions themselves, just because you read that AB5 has 102 exemptions or whatever, it doesn't mean that those exemptions can be taken advantage of because like everything else,

they come with fine print, caveats, poison pills, you know, some professions can only get an exemption if they pass 11 different criteria. You know, so whether you're able to take it, of that exemption or not is a totally different story. So that's kind of how it unfolded in 2020. And the independent contractor issue kind of, you know, I mean, we were no more important than anybody else

that were losing their jobs because of the pandemic. So it was really a gift for the author and the legislatures. They could just hide behind it, blame the pandemic for the job loss. And once community theaters started coming back just recently, And they always, they told me all along, we can survive a, we can survive the pandemic eventually and get back and open. But we can't survive AB5 because we can't, it increased the production costs of a single production by sometimes up to 70%. You know, you have to put every single person on payroll, including somebody who's just there for an hour or a day. And it's not possible.

Now, in terms of any sort of counteraction within California, you know, state legislature, is there any sort of movement to try to reverse AB5 or, you know, what are people feeling in California? Well, Kevin Kiley, who's now in Congress as a representative and he's continuing the fight. You know, in fact, I spoke before at his subcommittee in April to about AB5 and all the damage that it has done and continues to do. We had a lot of efforts to try to repeal it. There were lots of efforts to try to at least amend it, you know, or try to grant exemptions to other professions that were excluded.

And it just all just fell by the wayside, you know. And basically it's just death by a thousand cuts. And the legislature and the author of the bill is she's just moved on. You know, she was making all these promises. but now she's back where she came from, and she is the head of the California Labor Federation, which is the largest labor organization of state of California. It represents 1,200 unions and 2.2 million workers,

and she's up there wielding her power and making, you know, politicians and legislatures kiss her ring and do her bidding, what she had always done when she was the head of the Appropriations Committee in the legislature when she came up with ABF. Now, I wanted to also ask you about, you were on a recent panel here at the Heritage Foundation. The name of the panel was why protecting independence is vital for opportunities and flexibility. For those who weren't either able to attend in person or, you know, couldn't watch online,

can you speak more to about what you talked about in the panel and also just, you know, the name of the panel, why protecting independence is vital for opportunities and flexibility? Well, I mean, flexibility is important for a lot of people, especially moms and people like me who are obligated to stay home and take care of an elderly parent, stay at home moms, or just, you know, it's just their new way of working now, you know. But it's not the only benefit of being an independent contractor. I get to set my own rates. I get to pick and choose my own clients. I get to deduct my expenses, which is hugely important for me. I get to invest in my own equipment.

And I also get to try, I'm not stuck in one lane in a job. I get to expand my offerings. So for me, I, you know, taught myself how to do interior photography and interior lighting to expand my offerings as a photographer for the kind of, you know, magazine that I was an editor of, which was a home magazine. So I never would have had that opportunity, you know, in a, in a, in a, in a, you know, nine to five job, you know, but deducting your expenses is really important. Now, just to circle back to AB5, what is the number one takeaway you want our listeners to know about AB5? Well, don't believe everything you read because so many people have their facts wrong about

AB5. It's very confusing, first of all. A lot of people get it mixed up with Prop 22. So Prop 22, if you're not familiar with, it was a ballot initiative that was brought forth by the ride share and app-based delivery companies to exempt them from the ABC test of AB5. And it was a voted on by 60% of the voters in 2020. But it only gives them their own special carve out. It doesn't exempt the whole gig economy. And that's one of the mythologies that you read over and

over and over again, Prop 22 exempted gig workers. Not, it's just exempted ride share workers. That's it. And delivery. Prop 22 did not repeal AB5. AB5 is alive and well. AB5 is wreaking havoc on so many professions. We have identified 600 categories of professions in our group that had in one way or another has been impacted negatively by AB5. Another segment that, is overlooked, it's not just affecting independent contractors. It's devastating small businesses who hire independent contractors. And the Employment Development Department, they conduct these really ruthless payroll tax audits looking for misclassification violations anywhere they can find it. And the fines and the penalties and all the back pay and wages and everything that

that you could end up owing for just having a videographer, independent contractor here or there throughout the year doing occasional work for you, could be enough sometimes to put you out of business. I mean, I've had stories, audit horror stories coming into my group from music store owners, photographers, videography platforms, florists, architectural renderers, solopreneurs, people that, you know, moms and pops, that's what's, you know, the narrative,

it's always being framed around these big industries like Uber and Lyft and trucking, you know, and that's what people think AB5 is, that's all it's about and everybody else doesn't apply to. It's not true. AB5 is intended to apply to every single worker in the state, and every single business in the state of California unless you have an exemption. Well, Karen, thank you so much for joining us today. Just before we go, any final thoughts? Well, I'm just happy to be able to come here to Washington, D.C.

and share a little bit about the ongoing devastation of AB5. It's not something that's in the past. It's something that's still unfolding in California. And the reason that it's important to national listeners of yours is that, you know, they're trying to implement the ABC test from California into federal. regulations and then also in other states. And because AB5 has such a bad reputation, they might try to, you know, say, oh, no, well, we're not really doing that, but they really are. And so what you want to look out for now is that the USDAOLB will be unveiling a rule shortly, a six-factor

rule that will severely restrict independent contracting nationwide, and it mimics the ABC test of California. So you're going to see a lot of fallout very soon from that and a lot of lawsuits coming up. And Julie Sue, who is now the deputy, she's the acting secretary of labor with the Department of Labor under the Biden administration. She came from California. She endorsed and enforced AB5. And she's going to be, I mean, she was a labor commissioner there from 2011 until 2018 and that she was ahead of the EDD up until she became Deputy Secretary of Labor for Biden, why they're promoting her after all her fiascos. I have no idea. But California's chaos is coming to a coming nationwide. I mean, it can. And we're, it's not speculation about

what these laws can do in California. We're the canary in the coal mine. Well, Karen Anderson, thank you so much for joining us. Thank you. And that'll do it for today's episode. and for our series featuring Clement Troutman and Karen Anderson. If you haven't had the chance, make sure you subscribe to The Daily Signal, wherever you get your podcast, and help us reach even more listeners. They're leaving a five-star rating and review. We read and appreciate all of your feedback. Thanks again for listening.

Have a great Monday, and we'll be back with you all this afternoon for top news. The Daily Signal podcast is brought to you by more than half a million members of the Heritage Foundation. Executive producers are Rob Luey and Kate Trinko. Producers are Virginia Allen and Samantha Asheris. Sound designed by Lauren Evans, Mark Geine, and John Pop. To learn more, please visit DailySignal.com.