Assemblywoman Lorena Gonzalez at the Governor's signing of AB 5. (Photo: Official website Assemblywoman Lorena Gonzalez)
California’s Draconian AB 5 Continues to Decimate the Careers of Independent Professionals
AB 5 has led to a significant decline of 10.5% in self-employment as well as overall employment of 4.4%) in California
By Karen Anderson, December 31, 2024 7:17 am
As California’s onerous AB 5 law enters its fifth year of chaos, independent professionals in the (once) Golden State continue to experience disruption and/or decimation of their careers across hundreds of industries and professions, thanks to the freelance-busting policy authored by California Labor Federation’s leader Lorena Gonzalez, former assemblywoman from San Diego.
From truckers, event planners and nail technicians to community theaters, nonprofit arts groups, wedding photographers, massage therapists and licensed pharmacists, more than 600 categories of professions have been harmed in some way by AB 5 since it was enacted in 2020. Here is a recap of lowlights from 2024, and what to expect in the coming year:
Beginning January 1, 2025, licensed manicurists lose their temporary exemption from AB 5 and will no longer be allowed to rent booths at any salon, not just nail salons. This will affect 130,000 manicurists, along with the 30 percent of 190,000 estheticians who are also licensed as manicurists. Inexplicably, barbers, hair stylists, estheticians and electrologists can rent space in a salon or spa, but not manicurists, who must be converted into W-2 employees, or more likely be terminated by the salon.
Also beginning January 1, 2025, the temporary exemption for construction trucking services expires. In an act of naked favoritism for the newspaper industry, the legislature unanimously extended the newspaper carriers’ exemption by another five years until March 2030, the only industry to receive a reprieve from AB 5 from Sacramento in recent years.
January 2024 marked the release of blockbuster study conducted by George Mason University, which found that AB 5 has led to a “significant decline” in self-employment (by 10.5%) as well as overall employment (by 4.4%) in California. Empirical data from the Mercatus Study found no evidence of the law’s intended purpose: to increase traditional employment and expand unionization in the state. Alternate headline: AB 5 is an abject failure.
Ironically, the purported original target of AB 5 prevailed after a years-long battle in the courts when Proposition 22 was upheld as constitutional by the California Supreme Court on July 25, 2024. Passed by voters in Nov. 2020, Prop 22 allows ride hail and app-based delivery drivers to remain independent contractors. Contrary to most headlines, Prop 22 does not exempt the entire “gig economy” from AB 5, just Uber, Lyft, DoorDash, et al.
Unfortunately, in 2024, independent owner-operator truckers were not spared from the minefield of AB 5 after years of litigation that had temporarily stayed the enforcement of the law on truckers. It was the end of the road for California Trucking Association’s lawsuit against the state when CTA dropped its appeal on Aug. 23, 2024. The Owner-Operator Independent Drivers Association (OOIDA), however, will carry on with its litigation, asserting that AB 5 violates the Commerce Clause of the U.S. Constitution.
Further proof that AB 5 is causing disruption in the trucking sector, a family-owned trucking company and brokerage—California Intermodal Associates Inc., headquartered in Commerce—ceased operations in April 2024 after 25 years in business, citing the state’s independent contractor law, AB 5.
In the arts sector, challenges endure across the state. Indie film producer Dan Cheatham moved his entire operation to Germany after AB 5 destroyed his business in Temecula. Orange County Opera shut its doors this year due to AB 5 after 50 years of offering educational outreach programs about opera to elementary-age students.
Based in Northern California, the nonprofit Solo Opera announced its closure at the end of 2024 after not being able to keep up with the exorbitant costs that AB 5 added to its small budget. Solo Opera was a chamber opera company that produced small operas for more than 25 years in Contra Costa County. In June 2024, Aurora Theater in Berkeley asked for help from the city so it wouldn’t have to close, citing AB 5 as a primary reason for financial difficulty. It was just one of many arts nonprofits in California that struggled under AB 5 in 2024, including Brava Theater in San Francisco, and Murphys Creek Theater in Murphys.
Perhaps the most disappointing news of 2024 came from the “en banc” panel of 11 judges for the 9th U.S. Circuit Court of Appeals, which ruled on June 10, 2024 that AB 5 does not violate the Equal Protection Clause of the 14th Amendment, and that law and its crazy-quilt of nonsensical exemptions are “rational” even in the face of empirical or anecdotal evidence. The panel overturned the previous three-judge panel of the 9th Circuit that ruled in March 2023 that AB 5 did plausibly violate the 14th Amendment, having issued a scathing rebuke against then-Assemblywoman Lorena Gonzalez for her bad behavior when crafting AB 5 and its arbitrary exemptions for the chosen professions she alone decreed. (Olson v State of California).
As AB 5 inflicts death by a thousand cuts on Californians in the coming year, ruthless payroll audits and investigations will continue to pour forth from the Employment Development Department and the Department of Industrial Relations against those who engage with California-based independent contractors. The astronomical fines and penalties for misclassification can and do put businesses out of business. Meanwhile, more than 20,000 freelance data annotators could be swept up in a class-action lawsuit filed in Dec. 2024 against San Francisco’s ScaleAI for alleged violations of the draconian ABC worker classification test of AB 5.
After all of the aforementioned legal pursuits came to a dead end in 2024, the only pathway for California to rid itself of this putrid law would be a ballot initiative that repeals AB 5 for everyone. The next statewide election takes place in 2026, enough time for AB 5 to wreak more havoc on self-employment, independent contracting and small businesses throughout the state.
RELATED ARTICLES
-
-
September 14, 2020
-
March 5, 2020
The Dem Party is only “pro choice” for killing unborn children and castrating, mutilating, and sterilizing children after they are born.
Dems are also “pro-choice” about letting women divorce abusive spouses that want to control every action of their wives and children, even to the point where they insist on the women sacraficing her own life in futile efforts to save non-viable fetuses (something the GOP wants to take away). Dems believe women should have the to use birth control so they don’t end up dependent upon men with dark age mentalities (something the GOP wants to take away). Dems also believe that everyone should have the “choice” to have health insurance, even when that insurance policy is likely to be unprofitable for the insurer (something the GOP wants to take away). Dems believe you should have the “choice” to breath clean air, drink clean water, and live on ground that is not radioactive or polluted with heavy metals (something the GOP wants to take away). Dems believe children should have the “choice” have a nutritious lunch at school even if they are poor (something the GOP wants to take away). Dems believe people should have the “choice” to choose their own religious beliefs (something the GOP wants to take away).
More California job wreckage and freedom-killing deterioration, and all for foul-mouthed Lorena to plump up the ranks of the state’s thinning but still destructive Marxist unions. Is she expecting a bronze statue for this one? Who even knows, she may get one. Thanks, Lorena! Good job!
The criminal Democrat mafia that controls California is doing everything they can to destroy the state while they loot it.
LOL, the “criminals” are the ones attempting to make sure workers get paid fair wages, while the “good guys” are the ones fighting to allow corporations to steal those wages? got it!
People should stop voting for democrats at the state level. So many unnecessary regulations it’s unbelievable.
So no one is pissed off that Lorena wrote the law to benefit the unions, and then bailed on her elected role to take a cushy UNIION LEADERSHIP job???
Doesn’t that make your blood boil, that this self-serving b*tch effectively wrote her own ticket to increased union dues and her inflated salary??? If it doesn’t, it SHOULD…
“Under the ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions:
The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
The worker performs work that is outside the usual course of the hiring entity’s business; and
The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”
cry a river, business owners can pay benefits to employees or they don’t deserve to be in business, shove it you slave drivers.
I spent 17 years as an attorney for the California Labor Commissioner, based in San José, where the wage claimants I represented included high tech workers in Silicon Valley, as well as farmworkers in the Salinas Valley. We did NOT have jurisdiction over wages earned by Union members, covered by a CBA (collective bargaining agreement). AB 5 was passed not to benefit unions or Lorena Gonzalez, as some have suggested, but because there was a serious problem with employers and companies mid-classifying employees as independent contractors and seeking to avoid Workers’ Compensation payments, unemployment and other employer requirements.
👍
yep, it’s going to continue in this Democratic Plantation state. Californians will continue to revote this Dems back in office, over & over again. Let’s raise the fuel tax some more while their at it & Let’s get A.O.C. here so she can turn all Californian’s to Soy-Molians!
This sums up the Dem party. Destruction of the fundamentals that made California golden.
It is bad!
It’s amazing they keep voting the Democrats in office. All the barber shops are now only one person or closed there shops. They are so afraid that they will miss out on collecting tax money.The majority of California voted for Harris.Figure that out.