Gene J. Puskar/Associated Press
- California succeeded in rolling back restrictions on independent contractors with the passing of Prop 22.
- Americans have long relied on freelance work, and deserve to have the flexibility required to do so.
- Austen Bannan is a senior policy analyst in employment at Americans for Prosperity.
- This is an opinion column. The thoughts expressed are those of the author.
- Visit Business Insider’s homepage for more stories.
On Election Day, Californians soundly rejected the state’s recent efforts to restrict independent contracting, voting overwhelmingly to allow app-based drivers to continue setting their own hours and the freedom to be their own boss.
People have long turned to independent work – picking up jobs or building careers as tutors, fitness instructors, hair stylists, journalists, health care specialists, Uber and Lyft drivers, and hundreds of other fields – to provide for their families and pursue their dreams on their own schedule. 17 million Americans have quit their jobs to become independent contractors, with 60% of those now reporting they earn more in their new role.
Proposition 22 showcases the broad support for independent contracting and the flexibility it provides to the lives of both consumers and workers. But by exempting app-based drivers from being classified as employees, it cuts another hole in the Swiss cheese regulatory structure of 2019’s Assembly Bill 5. That law, and the recently enacted AB 2257, reclassified independent contractors across all but about 65 industries as employees, affecting more than 1 million workers and putting tens of thousands of jobs at risk. Indeed, workers in 135 of the affected occupations said AB 5 would hurt them.
Having failed to stem the tide of AB 5, Uber and Lyft were able to get themselves added to the list of companies with exemptions through Prop 22. In the bargain, they accepted wage and benefit mandates that perhaps they can afford, but many small businesses and start-ups can’t.
This is not a model other states should follow. Legislation allowing companies to provide benefits to independent contractors would be a welcome step, but forcing companies to provide these benefits, as Prop 22 does, would be detrimental to many independent contractors and businesses.
This hybrid system is supposed to be a middle ground, providing some of the flexibility of freelancing with the assumed benefits of being an employee.
What it will actually do is sow more confusion, destroy the livelihoods of thousands of independent contractors, and leave many matters unresolved. For instance, labor unions are not only interested in forcing independent contractors to become employees that are easier to unionize, but are also exploring industry-wide bargaining that could be applied to independent contractors, including this new class of hybrid workers. This would not only lead to previously independent workers being under union control but also lead to loss of flexibility and employment opportunities in each impacted sector.
You can’t blame companies for trying to play the game the state forces on them, but its workers in California and, potentially, across the nation, who will pay the ultimate price for the political battles over their careers.
The COVID-19 pandemic has highlighted how important it is for people to have the flexibility to work on their own terms.
That’s why the last thing the government should do is impose the kind of restrictions found in AB 5 that make it harder for people to supplement their earnings or make a living as an independent worker, as roughly one-in-ten American workers do.
It’s likely, though, that more governments will try in 2021.
President-elect Joe Biden has expressed support for the California restrictions, giving a push for federal legislation momentum. The House passed such legislation last February, though the Senate did not consider it.
A Biden administration already has a template from the Obama administration. Under Obama, the National Labor Relations Board made it possible for unions to organize independent contractors as if they were employees, and the Department of Labor created guidance to more aggressively reclassify independent contractors as employees, removing the flexibility contractors cherish and jeopardizing some jobs altogether due to the costs of complying with the mandates.
Regardless of what happens in Washington, several state legislatures are pondering similar laws.
The questions for state lawmakers come down to this: If California, with all its built-in biases toward progressive politics, could not fashion a workable overhaul of independent contracting without offering exemptions to a multitude of industries, why should it even bother? Why favor one industry over another? Why put millions more Americans’ livelihoods at risk?
Instead of copying California’s failed attempt to force millions of workers to lose their independence and ability to earn a living, lawmakers would be better served to look at Florida and Tennessee, where legislators could consider measures that would eliminate barriers by simplifying the rules for independent contracting.
Lawmakers should be making it easier for more people to be included in America’s economic recovery, not excluding anyone from choosing their own path toward independence.
Companies will continue to innovate, and you never know where the next Uber or Lyft might come from. Politically driven restrictions on independent contracting could kill some of that innovation before it has a chance to blossom. Exemptions only create a system rigged in favor of a few. Better instead to remove barriers and let everyone flourish in whatever way best suits their circumstances.
Austen Bannan is a senior policy analyst at Americans for Prosperity.
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