
California's new gig economy law could put freelancers out of business - jonbaer
https://theweek.com/articles/873453/how-californias-new-gig-economy-law-could-freelancers-business
======
beefalo
Writing 4 articles per week for a single publication, possibly writing
exclusively for them, sounds like a pretty good case for considering someone
an employee rather than a contractor.

~~~
cnst
In a recent Newsweek thread here on HN, I think it was revealed that employees
were expected to write 4 articles per day, not per week.
[https://news.ycombinator.com/item?id=21339990](https://news.ycombinator.com/item?id=21339990)
("they’d have to write a minimum of four stories per day")

Doing 4 short articles per week wouldn't really fly for a full-time employee
the way all these papers and magazines are doing nowadays, where a whole bunch
of them already have had to shutdown.

The way this law is written, where the freelancer cut-off is at 35 articles a
year, even someone like Boris Johnson wouldn't be able to "knock off an
article as a way of relaxation" on a part-time basis.
[https://www.theguardian.com/politics/2009/jul/13/boris-
johns...](https://www.theguardian.com/politics/2009/jul/13/boris-johnson-
second-salary-chickenfeed)

------
vadym909
That is the point of the law. If you want to work exclusively for one company,
you are not a freelancer- you are an employee and the company owes employer
taxes for you. They don't get off and you don't get to ask for relief for them
using the "they will terminate my contract". If that is allowed, every
industry will find a way to start using freelancers instead of employees.
Which is fine if you so desire, but then you have to re-jig how taxes like
social security, unemployment insurance and workers comp are collected and
worker protections like min wages and overtime are enforced. Else you are just
allowing for a few tax dodgers from benefiting at the expense of everyone
else.

~~~
ars
You are misinformed. Freelancers pay the exact same social security, Medicare
and other taxes as employees. The bookkeeping is slightly different, but the
amount collected is identical.

~~~
jjeaff
They pay the same, yes. But they pay all of it. With an employer, the employer
pays half and the employee pays half.

~~~
ars
Which is a distinction without a difference since all that happens is the base
pay number is different.

The take home pay, and the tax paid is identical.

------
verdverm
It's seems plausible to create a "company" around the freelancer to keep
things as they essentially are. Make it a company to company contract,
freelancer has minimally more overhead

~~~
ars
Sounds like a business opportunity. Create a company who's only purpose is to
bypass these rules.

~~~
jjeaff
Most likely, it would be a legal zoom like company that allows you to easily
form your own LLC, elect for c corp tax filing status and then generate
invoices and send to the companies that hired you.

------
yalok
What does that law mean for software engineering contractors? Currently, I
need to work at least 30 hours a week to qualify for full time benefits, and
the law actually prevents me from heaving a group health insurance benefit
until I am considered full time. Does that change with the new law?

------
Hokusai
The gig economy is not about freelancers but about misclassifying employees to
negate their rights.

> Naturally, Uber and Lyft have already announced they have no intention of
> changing how they classify their drivers.

My point.

> big business will always have the resources to shield itself from harms the
> little guy will suffer

This is a dangerous argument to justify that big corporations are about the
law. Luckily for now they still have to submit to the rule of law, even that
sometimes is not easy.

------
x0x0
This article is straight bullshit, and no good analysis comes from bullshit.

The main claim:

> _To put that in context, here at The Week I write four columns per week.
> Were I subject to a 35-article cap, I 'd hit my limit here in less than nine
> weeks. So I'd either have to stop writing for The Week by the end of
> February or dramatically slow my pace of work to less than one column
> weekly, cutting my yearly output from about 200 columns to the mandated 35._

Taking the example, what AB25 actually says is that a journalist on a 1099 has
a limit of 35 articles per year per pub. To exceed that limit, the journalist
does _not_ have to be fulltime. They merely have to be paid on a W2.

afaik AB5 is unfortunately unclear -- though the courts will soon resolve this
-- on whether the journalist would have to be paid W2 on articles [36, inf) or
whether it would be articles [1, inf), in the case that the journalist write
more than 35 articles in a year.

Nonetheless -- and whether you support the law or not -- let's please not
discuss it on a foundation of lies.

~~~
jameslk
> Taking the example, what AB25 actually says is that a journalist on a 1099
> has a limit of 35 articles per year per pub. To exceed that limit, the
> journalist does not have to be fulltime. They merely have to be paid on a
> W2.

That's the point here. They cease to become freelancers, which means the
company has to pay for many types insurances, benefits and the other half of
social security tax. This usually adds about 20-30% of additional overhead on
each worker.

That might sound like no big deal and even favorable to the freelancer but
that's not what the outcome will be. Businesses don't just reach into their
pockets and start paying for these things. They either pass down the 20-30% in
losses to the freelancers or just hire full time employees to replace the
freelancers.

See for example the effects this type of heavy-handed regulation has had on
other "freelancer"-dependent industries:

[https://www.sfexaminer.com/news/new-rules-for-contractors-
ha...](https://www.sfexaminer.com/news/new-rules-for-contractors-have-
unexpected-consequences-for-the-citys-strip-clubs/)

In other words what the author has said is true: it becomes difficult or near
impossible to make a freelance income from CA businesses.

~~~
x0x0
Nope, the claim is this:

> _So I 'd either have to stop writing for The Week by the end of February or
> dramatically slow my pace of work to less than one column weekly_

If the company chooses to only use 1099, that's their choice. But they have a
W2 option out there.

> * the company has to pay for many types insurances, benefits and the other
> half of social security tax. This usually adds about 20-30% of additional
> overhead on each worker.*

That's pure nonsense. If you're not providing health insurance -- which is not
required under a threshold of hours per week, and which a freelancer like this
is in no danger of hitting -- social security plus medicare are about 8% for
the employer. On minimum wages of $12/hour in california, you're paying
_nothing_ like 30%. The employer also wouldn't be paying for office space,
computers, internet, IT, or treating the employee decently (food, drinks,
etc), all of which is rolled up in the typical 25% that employers use as a
rule of thumb for overhead. The actual required overhead is minimal.

Now if the employer doesn't want to pay a fully loaded W2 cost of probably
under $13.50/hour for CA, that's their choice. But they don't need nonsensical
numbers made up to support them.

