The New Fed Contractor Rule is Great! …But Doesn’t Go Far Enough, Says the LA Times

Sometimes alternate realities are fun. A good movie, an engrossing sci-fi book, thinking ever so briefly what you will do with all that money when the lottery ticket you just bought wins.

Harmless escapism and, to be blunt, something that is actually psychologically healthy.

And then there’s living in an alternate reality, an alternate reality that impinges upon and damages actual reality.

Welcome to the newsroom of the Los Angeles Times.

In this week’s installment of “You’ve got to be kidding me, Pyle!” the Times decided to take a look at the new, unconscionable if you are a contract worker, labor law that Julie Su’s U.S. Department of Labor emitted.

It can, in all its glory, be found here, but since you may not have a subscription and/or its behind a paywall and/or your blood pressure is already a tad on the high side today and you really shouldn’t click through, let’s sum it up:  AB 5 fantastic, new fed rule very good, and, um, that’s all you need to know.

That premise/spin/bias could not be more egregious, said Karen Anderson, founder of Freelancers Against AB 5 and Visiting Fellow with the Independent Women’s Forum.  

“Here in California, AB 5 upended everything from community theater and indie-filmmaking to event planning, independent healthcare, wellness professions, dance, nonprofit arts, and more. We have archived thousands of stories of lost livelihoods and decimated businesses due to AB 5,” Anderson said. “If only the LA Times were interested in covering those stories rather than shilling for Big Labor and Lorena Gonzalez, the Black Widow of Public Policy.”

At issue is the new rule that creates a highly dubious and easily manipulable standard for when a contract employee should be an actual full-time employee.  The rule, which took effect March 11, does not take into account the fact that most freelancers specifically choose to be freelancers to be able to set their own schedule and pick and choose for whom and on what they will work. Nor is the fact that many companies hire contract workers to do tasks they need done but don’t really support the need for a full-time employee considered.

Additionally, the rule is vague, its enforcement is left up to the whim of labor department employees, and already has made some companies across the nation cancel freelance and independent contractor agreements out of fear of what will come next.

But the Times piece is chock-a-block full of wistful hopes that a line-for-line version of California’s anti-freelancer AB 5 regulations – regulations that impacted hundreds of thousands of local livelihoods – become written into federal stone, regardless of the devastating effect it would have on millions of Americans.

“President Biden’s promise to replicate California’s law at the national level has fallen victim to congressional gridlock and industry clout. This week, his Labor Department began enforcing a new administrative rule outlining which employees should be classified as gig workers. But industry experts say it amounts to a half-measure that falls short of California’s protections and is unlikely to result in the same type of benefits for the increasing number of Americans who rely on contract work to pay their bills,” reads the piece.

First, “industry” experts say no such thing – union people do.

Second, what it is likely to do is to make it far more difficult “for the increasing number of Americans who rely on contract work to pay their bills.”

It should be noted that the 30 paragraph article contains exactly three paragraphs that could be considered contrary to the happy lie spin of the labor leaders, like the unctuous Lorena Gonzalez (she wrote AB 5 and as a reward got hired – straight out of the legislature, not even a nod to subtlety –  as the state’s labor federation chief) who said the fed rule is a “more standardized approach nationally is a good thing. I’d like it to be stronger, but we’re not unhappy.”

Note – do NOT make Lorena unhappy – just ask the woman and government union member she threatened after her husband, beyond disgraced former San Diego Supervisor Nathan Fletcher, allegedly sexually harassed her.

The article repeatedly mentions big gig companies like Uber and Lyft and how much money they spent to…successfully get out from under of AB 5. But by focusing on the shiny object of EVIL CAPITALISM, the Times intentionally ignores the fact that the vast majority of America’s freelancers and independent contractors DO NOT work for “gig” companies.

Beyond the overall delusional dismissive tone of the article, it also gets many of its “facts” dead wrong.

First, the article states that:

“President Trump had rolled back similar rules in place under prior administrations, curtailing the Labor Department’s enforcement efforts. Biden’s rule essentially restores the status quo before Trump, according to experts.”

Wrong and false.  The Trump administration’s contractor clarification rule was the first of its kind; for the 80 years prior such determinations were made in court and based on a mishmash of precedent and common practice and opinion.

Second, as noted, the story focuses on big bad companies and forgets that there were more than 600 different freelance jobs categories covered by AB 5 – and now at risk of reclassification due to the fed rule, Anderson said.

“It’s rich that LA Times focuses on the Prop 22 Uber/Lyft carveout for drivers, given that LA Times lobbied behind the scenes to get an exemption from AB 5 for its own delivery drivers who actually ARE misclassified independent contractors,” Anderson said.

Third, the story laments –  “But even Biden’s modest efforts have met with resistance from industry allies” – that Biden couldn’t get an exact replica of AB 5 through Congress, implying it’s only bad Republicans and greedy companies holding it up. 

As can be shown by the bi-partisan opposition to moving Su herself from “acting” secretary to permanent, that is not correct.  It – and bills like it proposed previously – have consistently failed to garner enough support.

Fourth, the article quotes a union official as saying imposing exact AB5 rules at a federal level through the administrative rule making process – and without Congressional authority – would be subject to lawsuits.

“Lynn Rhinehart, a longtime official with the AFL-CIO who worked in the Biden administration until November, said the new federal rule would help workers and businesses clarify their roles, “but it’s not AB 5” — a change that would have been challenged in court if enacted without congressional approval,” the article reads.

But the article fails to note that the new Su “AB 5 lite” rule has already been challenged in court multiple times, thereby making that argument meaningless.

The Times did admit the existence of a study “suggesting California workers in affected fields had lower employment numbers,” but followed that up with another “left-leaning, pro-union think tank” study that found blue collar contractors make less money than full time employees.

While the article did not quote the first study directly – that found that “self-employment decreased post-AB 5 by 10.5 percent on average for affected occupations,” the article does explicitly state the claim of the “left-leaning, pro-union think tank” that freelancers lose out on $16,700 a year in wages and such.

In the end, why is the issue so important to big labor, and therefore, the Times ?

Unions have been pushing for years to reclassify freelancers as full time employees because freelancers – unlike direct company workers – cannot be unionized. Therefore, the millions of contractors in the nation are not paying dues the union can then shift to the Democratic Party.

For her part, Anderson will continue fighting for freelancers, even in the self-described “most pro-union administration in history.”

“Joe Biden has made no secret that he LOVES AB 5 and wants to see California’s draconian ABC test in federal tax, labor and employment laws. For those who think this rule isn’t inspired by AB 5, read the first draft of the rule where DOL praises AB 5 and the ABC test of California and LAMENTS the fact that they cannot deploy it verbatim into the (federal labor rules) due to a technicality,” said Anderson.  “Read the 339-page rule and you’ll feel like you’ve descended into Dante’s Inferno and the 9 Circles of Hell. It is obtuse, arbitrary and capricious, and threatens to cast a chilling effect on more than 60 million independent professionals nationwide.”

And that’s why Julie Su – the former California Secretary of Labor who helped write and enforce AB 5 and oversaw the unemployment agency as it hemorrhaged upwards of $40 billion to fraudsters during the pandemic – still has the word “acting” in front of her title.

Too bad she has the title at all.