The following is a recent press release of The People v. AB5.
AB5 Kills Freelance Work - Now, Freelancers Kill the Work of Pro-AB5 Legislators
LOS ANGELES — Mike Garcia, a Navy veteran and new face to Republican politics, has defeated his Democratic opponent Christy Smith in the special election for the 25th Congressional District, thanks in no small part to the strong support he received from California’s freelancers and self-employed.
In the weeks leading up to the special election, Assemblywoman Smith doubled down on AB5, and as a result she lost support on both sides of the aisle. In an interview, Smith claimed that the self-employed do not pay taxes, accusing independent contractors and their hiring entities of tax evasion. In fact, freelancers pay the self-employment tax, a 15.3% tax that funds Social Security and Medicare, in addition to federal and state income taxes. In a subsequent interview, Smith ignored the urgings of her constituents and continued to insist that the self-employed “don’t play by the rules.”
Smith’s unfounded and inaccurate comments laid bare her disdain for the self-employed and played a major role in her defeat by Republican Mike Garcia. California’s freelancers, in turn, made their disdain for Smith known at the ballot box, handing Garcia a full twelve-point victory over Smith in a race that was expected to be close. Get the memo, Sacramento! There is a direct correlation between a legislator’s support of AB5 and bipartisan voter opposition, and this correlation is only growing stronger as more people become aware of the destructive effects of AB5.
We are The People v. AB5, a nonpartisan grassroots organization fighting for the freedom to freelance. We are freelancers, sole proprietors, self-employed individuals, professional service providers, and small business owners who are fighting for our livelihoods and our ability to make a living. Five months into 2020, AB5 continues to inflict pain upon our community. First, AB5 stopped 375+ professions dead in their tracks on January 1, 2020. Then, the COVID-19 crisis began, and thousands of freelancers who are following state and local guidelines by staying at home remain unable to use their time, skills and internet connections to generate income. Finally, the California Employment Development Department has continued to weaponize AB5 by issuing audit notices to small businesses throughout the COVID-19 crisis without so much as a flinch – notices which come with the threat of thousands of dollars in fines and associated legal fees. The effect is that many businesses are closing up shop and many professionals are considering leaving the state. The damage to families and livelihoods is irreparable.
Like Smith, Assemblymember Lorena Gonzalez, the sponsor of AB5, has repeatedly dismissed the concerns of freelancers and the self-employed, instructing them to go talk to their local union about the possibility of an exemption. And Governor Newsom, upon being asked in a news briefing about jobs killed by AB5, replied that he wasn’t sure that AB5 killed any jobs. Nor do the various “exemptions” offered by our lawmakers solve the problem; the recently-proposed musician exemption, for example, introduces at least a dozen new terms and definitions into the Labor Code, none of which have been interpreted by the EDD or the courts. The result across all industries is that more and more out-of-state companies are issuing notices that they will no longer contract with California freelancers out of fear of the expenses, fines, and litigation fees associated with AB5. Californians cannot and will not adapt to this new normal where the effect of needlessly complicated laws is to effectively outlaw virtually all independent contract relationships. There are over a million independent contractors spanning 375+ professions in California, and nearly all of them have had their ability to earn an income affected by AB5 in some way.
Mike Garcia's victory is a victory for the independent contractors and freelancers everywhere. Come November, California’s self-employed will not forget which politicians are responsible for AB5. Join our The People v. AB5 Facebook group to stay connected to the fight.
Recently, Assemblywoman Lorena Gonzalez, the sponsor of AB5, announced that following months of negotiation the long-awaited musician exemption had finally reached a draft final form. She issued a press release and bullet points about the musician exemption and its intended effects.
According to the Assemblywoman herself, the text of the exemption can't be released until the legislature is back in session. So, for now, we can only analyze the bullet points about the exemption. Therefore, as with everything on our website, none of this information should be construed as legal advice, especially when, as here, we are only extrapolating from a description of the bill rather than from its actual text.
An alternative for California app workers: withdraw your unemployment application and apply directly for federal aid
The Upshot: App workers have a choice between pursuing state unemployment and federal aid for the self-employed and, generally speaking, should select the one that will provide the most money. It may take longer to receive unemployment benefits from the State of California than it will to receive aid for the self-employed from the federal government. Importantly, don't apply simultaneously for both state unemployment and federal pandemic aid to replace the same lost income.
Yesterday we reported on the delays that California freelancers and independent contractors are experiencing in receiving Pandemic Unemployment Assistance (PUA). With our next two articles, we explore whether there is anything that app workers, freelancers, independent contractors, and the self-employed can do in light of this knowledge to help them receive their benefits faster.
In the past couple of days, we've seen an uprising of freelancers on social media who are understandably frustrated with the length of time that it is taking the California Employment Development Department (EDD) to implement the federal directives of the CARES Act and get Pandemic Unemployment Assistance (PUA) to the workers who need it. (To be clear, the official word from the EDD is that there is no way for freelancers to access PUA yet and to keep an eye on their website for instructions.)
The purpose of this article is to explore some of the reasons why PUA for California freelancers might be delayed. If you're unfamiliar with PUA and how it fits into the universe of assistance options available for freelancers, we recommend heading over to our California Freelancer Pandemic Assistance Chart so you have some context for this article.
Help! I accidentally listed my clients and business relationships on my California Unemployment Insurance application.
Some freelancers and independent contractors have contacted us in recent days concerned that they viewed our California Freelancer Pandemic Assistance Chart just a bit too late. These freelancers did their best to follow the ambiguous and often - conflicting - instructions on the California Employment Development Department (EDD) website and concluded that, as freelancers, they were being instructed by the EDD to list their clients and business relationships on the Unemployment Insurance form so that the EDD could "figure out" if they, the freelancers, were entitled to benefits.
As subsequent broadcasts from the Governor and the Secretary of Labor have confirmed, the EDD's language is carefully crafted to disguise its exploitation of the fact that millions of Californians have never applied for Unemployment Insurance before to build up a big database of businesses to audit and fine under AB5 during the crisis and after it subsides. Those of us who have built our livelihoods on freelancing and independent contracting are happy with our client and business relationships as they are, and we do not need the California Employment Development Department intervening in these relationships and regulating the details of their terms.
Those who inadvertently listed their clients and business relationships on their California Unemployment Insurance applications are wondering if there is any way to claw back their applications so that their clients and business relationships can avoid an EDD audit. As this is a developing situation, we are publishing this post with the most recent information we have available to us.
We at The People v. AB5 want everyone to understand who we are and why we have a dog in this fight. Fellow Democrats and other liberals have understandably expressed hesitation to join our cause, This is understandable. AB5 appears to be a Democratic initiative that generally advances liberal causes, and it therefore appears that fighting AB5 is therefore necessarily a Republican thing to do. Until you look under the hood it’s hard to realize that nothing could be further from the truth.
We’ll dissect all of that in future articles but for now we want you to know who we are and why AB5 matters to us.
This is the second in a multi-part series providing the basics of AB5 and how it fundamentally changes labor relations in California. The following is not legal advice and instead is intended to provide general information about AB5.
The first article in our AB5 Basics series explained who AB5 affects and provided some information about the mechanisms for its enforcement. You learned that AB5 targets hiring entities, and requires them to demonstrate that three particular things about the relationship between themselves and a worker are true in order to legally classify that worker as an independent contractor.
In this article, we’ll take a close look at what those three particular things are and why many freelancers, creatives, and small businesses are scratching their heads trying to figure out how to comply.
Here is our first AB5 Bulletin, which provides a close look at the information and misinformation we've seen swirling around in the past few days as California's freelance class has attempted to traverse the minefield in search of pandemic benefits while avoiding the AB5 mines buried underneath.
These bulletins provide a deeper dive beneath the surface for those who are interested in viewing our source material and our attempts to piece everything together.
Click here to view the AB5 Bulletin for April 4, 2020.
If you're concerned, energized, or frustrated by AB5, please join our Facebook group, The People v. AB5, where we will be coordinating specific, scaled action items to raise awareness and get our lawmakers' attention.
This is the first in a multi-part series providing the basics of California's Assembly Bill 5 ("AB5") and how it fundamentally changes labor relations in California.
A good place to start with AB5 is by understanding who AB5 targets. And, as we will see, who AB5 targets and who AB5 affects are two different questions. This has been a source of confusion for many people trying to wrap their heads around how this new law works.
In short, AB5 targets — that is, it potentially punishes — hiring entities. A “hiring entity” is exactly what it sounds like: the person or company who engages another individual for remuneration (money) for labor or services. In the world of labor law, the relationship between the hiring entity and the labor or service provider falls into one of two categories: the employment relationship and the independent contractor relationship.
After the recent passage of the CARES Act, individuals and businesses now have several options for receiving income replacement while the world sits in suspended animation. The variety of funding sources available to different types of workers and businesses depending on their situations creates a web of complexity that is already complicated enough to navigate. Unfortunately, the recent double-speak from the California Employment Development Department fueled the confusion and fear in California freelance and small-business communities.
If you can afford to consult a CPA, you should. However, for various reasons, this option is not available to many Californians. That's why we've put together a Google Sheet that breaks down the various assistance options available to different types of California freelancers, contractors, and professional service providers. Where possible, we've also tried to synthesize where the process could put your clients and business partners at risk of an audit.
Click here to view the California Freelancer Pandemic Assistance Chart.
Let us know if you have questions about the chart. The best way to connect with us is by joining our Facebook group, The People v. AB5, and posting your questions and comments there.
This information is updated as of April 2, 2020. The situation changes daily, so make sure to check the most recent blog posts for the most recent updates.
The CARES Act is our federal government's $2 trillion response to the COVID-19 crisis. Among other things, the CARES Act supplements the standard unemployment benefits that states offer to unemployed workers by providing grants and loans to small businesses and contractors, as well as an additional type of aid called Pandemic Employment Assistance (PUA). The purpose of PUA is to (1) provide expanded unemployment benefits to those who already have benefits through their states, and (2) to provide basic unemployment coverage to freelancers and independent contractors who would otherwise not have access to unemployment funds.
Under the CARES Act, each individual state is responsible for distributing federal PUA money to the residents who need it. In recent days in California, the desperate need of California's freelance class for PUA assistance has combined with the legislative debacle that is AB5 to create a maelstrom of confusion and uncertainty. Different websites present conflicting or ambiguous information regarding how to obtain PUA, and no one is sure which form to fill out and how.
TPVAB5 is a lawyer and freelance musician in Los Angeles. A lifelong Democrat, he was brought into this fight by AB5 and by the realization that politicians on both sides of the aisle are beholden to special interests.