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.
There is one aspect of PUA that is very simple and another aspect of it that is turning out to be profoundly complex. The simple part is that, if you were a W-2 employee who lost your work and applied for state unemployment benefits by filling out an unemployment application and sending it to the EDD, thanks to PUA you will eventually get an additional $600 per week added on to your current unemployment benefits, once the EDD gets around to implementing the program.
The complex part of the PUA equation is how PUA money is going to get to California's freelancers and contractors who are not currently eligible for regular unemployment benefits. We begin by comparing EDD communications from the past couple of days to what we've been seeing from the EDD over the past few weeks. There isn't much, but fortunately, we've been paying close attention.
As other sources have reported, AB5 was written by the AFL-CIO and is generally a union-backed initiative. Moreover, because there is an inextricable link between union activity and employment law, at least in California, the ties between our EDD and the unions are strong. (If you disagree with this statement, have a look at the graphic below.) We already know how the EDD first attempted to weaponize the COVID-19 crisis by leading out-of-work Californians into the misclassification trap, in lockstep with AB5's stated and unstated goals. They did this by using double-speak that helped to obscure how freelancers and contractors were to apply for aid, simultaneously suggesting that freelancers list themselves as their employer but also suggesting that freelancers list their individual clients and business relationships as their employers if they think they were "misclassified." This morning, the EDD issued the following notice, which is noteworthy because it is the clearest acknowledgment we've seen from the EDD so far that demonstrates that freelancers exist, that freelancers should not list the companies they work with on their UI forms, and most importantly, how an individual is to determine which camp they fall into:
To be clear, the language in the red box does not appear anywhere on the EDD's website or in any other EDD publication we've seen. This language only appeared in a notification that Thursday's union-sponsored EDD benefits seminar for the entertainment industry was getting cancelled.
The language in the red box is important for three reasons. (1) First, it is a suggestion from the EDD that a worker's own opinion about their own classification status is an element of the classification picture. This observation may become important as audit forms start getting sent out. (2) It is an admission by the EDD that self-employed people and independent contractors exist. (3) It is a suggestion by the EDD that self-employed people and independent contractors exist in the entertainment industry in particular, which is all the more remarkable given how restrictive the ABC test purports to be.
We digress, but only slightly. The language you see above was sent primarily to entertainment union employees along with anyone else who signed up for the seminar. It was posted on the seminar's Zoom page for about an hour and was thereafter promptly taken down. When we first saw this notice, we began to suspect that the EDD was caught between a rock and a hard place, being told by the federal government to distribute PUA aid to contractors while at the same time trying to placate union interests which insist that some-to-all of California's contractors are misclassified and should therefore not be entitled to direct PUA aid as contractors.
Our suspicions were further bolstered by the following letter, posted this morning, that 22 individuals, most of whom are either assistant/associate professors of law or other professionals, wrote to Congress. On behalf of whom, the letter does not say, but it is obvious from the last four words of the letter -- "full collective bargaining rights" -- that union interests were involved. (To be clear, we're four Democrats who support unions as a necessary component of the full panoply of worker protections. But in the case of AB5, we believe these same union interests have gone too far.)
The gist of the letter is the following:
What continues to disappoint us is that the interests supporting AB5 are controlling the narrative by framing their issue as one of 'employers' and 'employees,' with nothing in between. These interests have failed to provide any meaningful response to the genuine frustration of tens of thousands of legitimate freelancers who do not fit this model, and who feel blindsided and left out of the classification conversation.
The upshot is the following. Certain interests are pushing to raise the worker classification issue with the federal government in connection with current and future stimulus packages, and in doing so are contributing to the slowdown of the distribution of PUA benefits to workers, including freelancers, by calling on the federal government to declare, without any investigation or trial, that all "platform workers" are W-2 employees. As best we can tell, this is at least part of why California's PUA program has taken so long to implement, even for non-platform workers. And if you are a platform worker, well, we've already seen several Uber drivers apply for California unemployment benefits as employees and get a $0 benefit, so it's anyone's guess how long this classification war is going to take, and how long workers will be waiting for benefits to arrive as a result.
What these interests need to do is let benefits be distributed according to how people were getting paid prior to losing work. This is a public health and economic emergency; people need money now. State and federal governments already have a massive enough of a logistical Goliath to slay in distributing aid to residents. Don't add the classification war into the mix. If workers were paid via W-2, let them get their aid through regular unemployment insurance. If they were paid via 1099, let them get their aid that way. Remember, as self-employed individuals, our federal tax dollars paid for the PUA funds (as well as the PPP and EIDL loans) that are now available to us, so the idea that freelancers, self-employed individuals, small businesses, and other hiring entities didn't pay their share into the funds that they are now asking for is a fiction.
The bottom line is that this classification war is doing more harm than good during the COVID-19 crisis, and it needs to stop.
If you believe that these special interests should, at least for now, cease their interference with federal PUA money, and that a pandemic is not the time to be waging large-scale legal battles that profoundly affect millions of workers in industries completely unrelated to app workers, you can Tweet your concerns to some of the signatories of the letter. Two of those signatories are Veena Dubal and Sanjukta Paul.
One government official to whom you can Tweet your concerns is Julie Su, California's Labor Secretary. If you're self-employed, a freelancer, or an independent contractor, you can make it clear to her that you are happy with your worker status and your business relationships and you do not approve of the state's war on California's self-employed.
If you're concerned, energized, or frustrated by AB5 and by the issues that are arising as a result of AB5 during the pandemic, we invite you to join our Facebook group and our email coalition to get in on the fight.
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.