Worker's rights: Sasha Banks and Naomi dustup could result in challenge to WWE's contracts

I haven't posted in a good while, but a recent comment I made on a YouTube video (hat tip, JDfromNY206) about an interesting case involving long-standing misclassification of workers -- the classic independent contractor vs employee situation, debated and legislated long and hard here in California in recent years re: AB5 (see my numerous posts about it here; ironically on the side of certain indy contractors/freelancers, such as gigging musicians, not being forced to be classified as employees), made me take notice of the issue occurring over in Stamford, CT, with World Wrestling Entertainment, a billion-dollar mega company that is a fertile legal test case regarding its bizarre and craven, controlling contracts of its professional wrestlers, er, Superstars, as WWE prefers them to be called. They are athlete-performers that work year-round acting and engaging in challenging physical, often dangerous feats for our entertainment guided by scripted storylines. 

What piqued my interest? Well I'm a lapsed wrestling fan just recently reacquainting myself with the landscape, and these issues related to the walkout of two main roster talents, Mercedes Vernado (ring name owned by WWE, Sasha Banks) and Trinity Fatu (ring name Naomi) are blowing up the Internet. I won't go into detail as to why they walked off (there's plenty to read both on wrestling and mainstream news sites with various perspectives), and what kind of punishment WWE felt it needed to mete out.

Goodness knows I could write a year's worth of posts about WWE's non-traditional approach to hiring and treatment of talent, but quite honestly I've been waiting for the day SOMEONE on the roster with enough clout and a good lawyer would challenge the unbelievable contracts these folks sign as "independent contractors." One has to believe that the company has gone out of its way to keep challenges quashed and the Department of Labor out of its practices. But an investigation is long overdue. ANYHOO...

This is an expansion and condensation of my YouTube and Reddit comments on the matter...
 

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Sure, WWE can discipline Sasha and Naomi for walking out during a show (WWE's version of events here). They can choose to handle the situation as they have -- suspension, removal of merch, deleting Facebook pages, etc. BUT if they push any of their top talent too far, they can take WWE to court and win on every WWE wrestler contract's state and federal labor law violations -- and that can blow the roof off the industry as a whole.

WWE should be concerned about any challenge to the validity of its contracts in relation to independent contractor status versus employee. It doesn't matter whether wrestlers sign a WWE contract if they are not legally worth the paper they are printed on. WWE has coasted on the fact that there has not been sufficient competition in the industry, and thus wrestlers sign contracts that wouldn't hold water. They violate laws in Connecticut (see below) and other states regarding the definition of what an independent contractor is.

These performers have no control over what they wear, when they travel, how they travel, whether they can take independent bookings outside of WWE, etc. that is the definition of an EMPLOYEE. Not to mention its practice of releasing people under contract yet the same people cannot leave the contract before it's terminated is open to question legally.

Only wrestlers with sufficient clout and money would be able to ride out such a lawsuit, even if they are going to win it -- do Sasha and Naomi have that clout or desire to change the industry to benefit themselves and their peers? Most wrestlers have chosen not to rock the boat. To a degree, All Elite Wrestling (AEW) does treat its wrestlers as independent contractors because they can earn a living taking independent bookings, having their own merch shops, and owning their own twitch accounts etc.

That is also giving wrestlers bargaining power when they choose whether to leave WWE.

I'd like to see the Internet Wrestling Community (IWC) discuss the issue from this perspective in a sane manner, devoid of tribalism. It really is worthwhile because we are at a critical point where even actor and former WWE writer Freddie Prinze, Jr is in the process of creating his own wrestling promotion where he will treat his wrestlers as employees who will be members of the Screen Actors Guild as performers, a union that provides the very benefits that WWE wrestlers do not have and cannot have as long as the company considers them independent contractors.

WWE tries to treat them like independent contractors when it suits them, and treats them like employees when they want to control them. WWE can't have it both ways. 

Why? The documentation is out there.

As I mentioned, Connecticut (the HQ location of WWE/Titan) is one of 20 states that have adopted the ABC test for unemployment insurance eligibility and/or wage and hour protections for employees. So it is relevant if a company is classifying people as independent contractors when they may actually be employees...

"To address the problem of misclassification, more than 20 states have adopted what is known as the ABC test for determining whether an individual is an employee or an independent contractor for purposes of coverage of certain workplace laws. The ABC test got its name from the three, interlocking elements of the test—parts (A), (B), and (C). It establishes a presumption that an individual performing services for an employer is an employee, not an independent contractor, unless the employer can establish three factors:

(A) The work is done without the direction and control of the employer.

(B) The work is performed outside the usual course of the employer’s business.

(C) The work is done by someone who has their own, independent business or trade doing that kind of work."

Source: Misclassification, the ABC test, and employee status - https://tinyurl.com/yzu82aea

So, according to Connecticut state law, the WWE is clearly misclassifying the wrestlers that work for them. Factor (A) is the more egregious of the three. The wrestlers are misclassified just on that clause alone. Nearly every aspect of their work is controlled by the WWE. What they wear, how they travel, where they have to be, and the company determines their hours of work. How are they NOT employees?

The implications are huge re: burden on the employer and tax withholding, unemployment benefits, workman's comp, etc.

So yes, the WWE does not want its contracts being challenged in court on that basis.

The E has benefited from these contracts up until a few years ago because they were the only real game in town -- if wrestlers wanted to work and earn a decent living in the industry. WWE tries to eliminate competing, ascendant promotions not just in the name of market "competition," it is to protect its contract practices by squashing any competition challenging that norm.

The IWC should be behind the talent's ability to negotiate fair employment for their services that entertain us, rather than fealty to any promotion for tribal reasoning.

AEW, for example, may pay less, but its talent has the ability to earn more income through independent bookings and side gigs that WWE disallows or takes a cut out of. It and all promotions would be affected by changes wrought by legal scrutiny of WWE's contracts.

I also want to note that these issues are wholly separate from the matter of unionization, which seems to get conflated with the issue for some reason. I doubt the wrestlers themselves would agree to unionize any time soon, though a sale of the company could change that (see at the end). Addressing the question of whether WWE is violating existing labor law practices in its contracts would more profoundly, positively impact talent if challenged.

The benefits and other collateral issues would likely resolve themselves if the WWE would simply offer legal, truly independent contractor status contracts to talent -- or hire them as employees. but it won't do so willingly.

Will Sasha or Naomi challenge the E on this matter? Hard to say.

BTW, if WWE is ever sold, the employee/independent contractor status will be a HUGE issue for the buyer -- it surely will have to comply with state and federal law if that transaction is to go through, and WWE, particularly CEO Nick Khan, who is from the entertainment industry, knows this. For instance, Disney, based in CA, has to comply with state law AB5 -- that specifically defines what an independent contractor and employee are (Source: California's Historic AB5 Gig-Worker Law https://tinyurl.com/y35zzc6x). It will surely have to clean up all active "independent contractor" contracts WWE holds.

What I don't understand is the tribalism of WWE fans. You can enjoy the company's past/present content and still understand how the company has continually strong-armed the talent by attempting to crush its competition to ensure it is a monopoly. If there is no competition, that means wrestlers have zero negotiating power for decent benefits or contract terms. Even worse, its clout has allowed it to repeatedly skirt  labor laws -- how is that beneficial to the wrestlers people are supposed to be fans of? I find it strange.

WWE fans should be happy that there is an AEW (or Impact, NJPW, etc.), and hope for additional independents to thrive -- it means more wrestling of different types to enjoy, and more places of employment for the talent to earn a living. It also forces promotions to put out a better product to woo its audiences. It's a win-win for everyone.

 

Mask DIY! CDC rethinks use of masks - may be helpful to curtail COVID-19 exposure

The Center for Disease Control is rethinking its policy of telling Americans NOT to wear masks to prevent the spread of COVID-19. NYT:

Dr. Robert Redfield, the director of the C.D.C., confirmed in an interview with WABE in Atlanta, a National Public Radio member station, on Monday that the agency was reviewing its guidelines on who should wear masks. Citing new data that shows high rates of transmission from people who are infected but show no symptoms, he said the guidance on mask wearing was “being critically re-reviewed, to see if there’s potential additional value for individuals that are infected or individuals that may be asymptomatically infected.” 

The coronavirus is probably three times as infectious as the flu, Dr. Redfield said. Some people are infected and transmitting the virus probably as long as two days before showing any symptoms, he said.

...Dr. Fauci said: “The idea of getting a much more broad communitywide use of masks outside of the health care setting is under very active discussion at the task force. The C.D.C. group is looking at that very carefully.”

And the change is for good reason - the novel virus is staying in the air longer than epidemiologists thought:

There have been troubling reports that indicate the coronavirus may be able to travel farther in the air and stay in the environment longer than is possible by respiratory droplets, which have so far been assumed to be the primary mode of transmission of the virus. 

One study in Singapore found traces of the virus in air vents in patient isolation rooms. In another study, researchers at the University of Nebraska Medical Center detected extensive contamination in patient rooms as well as in air samples collected from the hallways outside rooms.

SO WHAT NOW? Given the shortage of surgical and N95 masks (those need to go to first responders and med folks), I found a great DIY solution below is better than a plain bandana (something the CDC advised not long ago, incredibly, to med personnel when PPE is not available).

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DIY Face Mask (Video)

Again, this is NOT a substitute for a sterile, medical grade mask (not that you can find any), or can serve as a fail-safe from contracting COVID-19. But it is disposable, fits well, and reminds you not to touch your face. Caveat - if you need to adjust your mask constantly, you're better off not using a mask rather than touching your eyes, nose or mouth! Now on to making the mask...

Supplies, all from $1 store, and makes a lot of masks!
- Coffee filters
- Roll of paper towels
- Bag of rubber bands
- Roll of wax paper or parchment paper. (The wax paper/parchment paper adds a modest moisture barrier, a big plus over just fabric.)

Instructions

1. Take large sheet of paper towel. Fold in half. Reopen.
2. Take 2-3 coffee filters and place on top half of open towel.
3. Cut a rectangular piece of wax or parchment paper and line the filter.
4. Fold the towel with the filter between the two sides.
5. Begin accordion-folding the towel as shown in the video.
6. Fasten the ends with rubber bands.
7. Insert and loop another rubber band at each end to go around your ears.
8. Done! Here are instructions on proper fit and use from the SF Dept. of Public Health.

Since the materials are so inexpensive and widely available, there is no need to sterilize, just toss and make (many) more. I guess the rubber bands can always be re-used by sterilizing them with Lysol or simply letting them sit for a few days.

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It should be noted that in Asian countries, mask-wearing is commonplace (and mandated in many cases) and community spread in those nations (e.g. South Korea). As you can see it is WAY less than the horrible curve the U.S. has (graphic).



Let's slow community spread by 1) Staying home, and 2) using masks, gloves, sanitizer, and sanitizing spray. It all helps. We are in this together!

AB5 - Democrats in the CA Assembly, Senate and Governor's Mansion - What Were You Thinking?

[NOTE: A repeal bill by Assemblyman Kevin Kiley, AB1928, will hit the floor for debate on February 27.  If passed and signed by Governor Newsom, it would immediately suspend the law. It faces stiff uphill opposition by the supermajority, but has wide support at the grassroots.]

A post by Sara Kustiner Pedri, in the Freelancers Against AB5 group by a CPA, illustrates the horror and folly of what has occurred in California with the introduction of AB5. Can't summarize it better than she has. And yes, I am a life-long Democrat. It's unfortunate when "your team" does something terribly autocratic, inflexible, and destructive to the economic engine of independent contractors (of any political stripe), but wrong is wrong, as Markos of Daily Kos also aptly noted. This is a nonpartisan issue. Repeal AB5.

AN OPEN LETTER TO DEMOCRATS IN THE CALIFORNIA STATE ASSEMBLY, SENATE AND GOVERNOR'S MANSION: WHAT WERE YOU THINKING?
Congratulations, California Democrats! You’ve successfully scared the holy bejeezus out of all California companies. Now, let’s talk. 

In Marvel Universe terms, you’re Tony Stark. You tried to do something to protect everyone, but you created Ultron. Now, it’s time for a Vision. 

It’s been 6 weeks since AB5 was signed and put into effect. We’ve now had 6 weeks to see some actual results. So, as a CPA with clients in the Independent Contractor world, and as a lifelong Democrat whose Assemblyperson and Governor actually voted for this shitshow that is AB5, I need to ask: What were you thinking? 

After reading the actual law, listening to interviews, and taking numerous courses on AB5, I simply don’t know what the thought process was behind AB5. What was the goal? Because, if it was to “protect California workers”, you’ve done an abysmal job of that. 

And if the ultimate nefarious goal was to have everyone join a union, then I have to ask: who was the genius who 1) didn’t consider that the result of AB5 would include dog walkers needing a union, and 2) then thought, “Hey, we need to make an exemption for dog walkers now!” Seriously. There is a line item in a California Labor Law that specifically states “dog walkers”? Ok, which one of you legislators has dogs that need walking? Because that’s like Internal Revenue Code laws that take effect on some arbitrary date like May 23, 1976, because some politician or lobbyist somewhere did something on May 22. 

For the most part, the laws were already on the books before AB5. 

a) Some companies were misclassifying workers. True. But the Borello Test was on the books. Catch them; don’t punish everyone for their misdeeds. You’ve increased the EDD funding budget for audits now – you could have done that before. 

b) California has had a law for years that states that companies must cover independent contractors with Workers’ Comp Insurance. Sorry, Senator Warren – I love you, but you’ve got that one wrong. It’s right there on the back of my State Comp Insurance Fund report. Of course, these W/C insurance companies may not have been paying out CLAIMS to independent contractors, but you realize that you should be going after the W/C insurance companies who took premiums but didn’t pay out, right? 

c) If you think these workers will now be covered by health insurance, you’re nuts. These ICs can work 50-100 different gigs in a good year. Did you really think they were going to change their health insurance coverage every time they picked up a new gig? I’ve got news for you. Switching health insurance when going from one long-term employment job to another long-term employment job is hard enough – COBRA, anyone? Employer-provided health insurance is NOT going to happen under AB5. Period. End of discussion. 

d) Minimum wage protection? You must be joking. Some of the professionals caught up in this make $300-1,500 a day. 

The laws were there. You just needed to enforce them. Instead, you took a single legal case, Dynamex (where one single company decided to break the rules and throw all their employees to IC status), and you brought the hammer down. On everyone. You have decided to ruin the livelihoods of 1-2 million true California independent contractors because someone somewhere screwed up on, what, 1,000 classifications? That’s some serious overreaction and, might I add, a rather large amount of California citizens to consider acceptable collateral damage. 

Let’s now talk about the known, proven effects so far. And, yes, they significantly disagree with Assemblywoman Lorena Gonzalez’s reporting. 

I myself, being naïve, was anticipating that my clients would now be receiving W-2s instead of 1099s, which is a huge problem in itself. AB5 has caused so much fear that hiring companies are now refusing to accept a W-9 with the legal name and tax ID of a legitimate LLC / partnership / S-corp / C-corp and are forcing these freelancers to provide a W-4 and go on payroll, even though they fulfill the exemption of Business-to-Business Contractors and the Borello test. 

You see, hiring companies aren’t going to the trouble of figuring out who is who. Everyone has become an employee – even legitimate businesses. These freelancers have operated as true businesses for years with business licenses, workers’ comp insurance for their own subcontractors (if any) as required by law, filing of 1096 and 1099s and DE-542s, paying unsecured business property taxes, etc. They also make large tax-deductible investments in their own equipment, tools, and work spaces. 

Forced to be employees, they now will receive W-2 income rather than Form 1099 income, and they will have no ability to deduct their business expenses related to any W-2 income. If they are Schedule C single-member disregarded entities, the Tax Cuts and Jobs Act of 2017 removed their ability to deduct unreimbursed employee business expenses on Schedule A. As such, their Schedule Cs will begin to run net losses, winding up with seeming Hobby Losses which are disallowed by the IRS and FTB. I can assure you these aren’t hobbies; they are livelihoods. If they are partnerships or S-corps, there will no longer be any Form 1065 or 1120S income, but their tax returns will continue to deduct business expenses, creating ongoing losses. Do you know how many years a Form 1065 or 1120S can issue K-1s with ordinary businesses losses before the IRS starts asking questions? Asking for a friend. 

By the way, with these losses you’ve created, you’ve just removed the TCJA Federal income tax benefit of the Qualified Business Income Deduction, because without net business income, there’s no deduction. 

In other words, AB5 will put these professionals out of business and they will close their LLCs, partnerships, and corporations. And it won’t be because of the expense of payroll taxes. It will be because they can no longer operate the businesses they previously legally established due to not receiving payment/income in the form necessary for proper tax reporting purposes. 

It has turned their income tax and business worlds upside down. 

But I was naïve. AB5 has resulted in far worse than that. 

Instead of switching ICs to employees, many hiring companies have simply cancelled contracts. Period. Done. Work gone. Needless to say, that sound you heard was 1 million independent contractors finding out they no longer have a source of income. 

And who’s getting these jobs? OUT-OF-STATE employees, because, lo and behold, your little AB5 states that California companies who hire out-of-state ICs aren’t affected by AB5. 

So, you’ve successfully 1) forced ICs to move out of state for work, and 2) allowed CA companies to hire out-of-state workers. Brilliant! You just took an entire demographic of mostly Democratic voters and MOVED them out of California! Tell me, who exactly are your political advisors? Because I want to make sure I do NOT hire them. 

And, lastly, as a CPA, you’ve tied my hands. I can’t even assist my clients in attempting to make a proper determination, because I am “jointly and severally” liable for any penalties ($5,000-$15,000 fine PER individual misclassification). Only a member of the bar can advise a business owner about classifying workers as employees or ICs. Guess what? Attorneys are booked up three months out. I guess that benefits you the most, as it’s difficult to find an available attorney to write up a class-action lawsuit against you. 

In summary, let me say that I hate… HATE… giving the GOP any talking points. But, California Democrats, you have brought this on yourselves. Now, fix it!

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Good reads...  

• See Big Labor, the AFL-CIO, use a sockpuppet Twitter account to front for pro-AB5 "gig workers"
• California's AB5 - wreaking havoc for independent contractors 
• Independent contractors both helped and hurt by CA's AB5 (Pam)
• AB 5 - CA’s New Independent Contracting Rules (exemptions)
• Why misclassification is a problem
• Will This California Law End Freelance Work?
• What You Need to Know About the AB 5 “Business-to-Business” Exemption
• How a New Law Will Change California Show Biz
• Vox Media cuts hundreds of freelance journalists as AB 5 changes loom 
• Pam on Michelangelo Signorile Show re: AB5 (Dec 30). 
• What is independent contractor versus employee (State of CA FAQ)
• Employment Determination Worksheet (State of CA PDF checklist test)
• How to find your lawmaker to write/call: http://findyourrep.legislature.ca.gov

Fantastic day of action in Sacramento at the Rally to Repeal AB 5​

It was a fantastic day of action in Sacramento at the Rally to Repeal AB 5​, hosted by Assemblyman Kevin Kiley​ and Melissa Melendez​. My bud and Faithfully Live​ colleague Jeff Salado​ were there to hear the compelling speakers at the event -- chronicling many groups of indy contractor professional careers -- including musicians -- devastated by the new law here in CA. https://tinyurl.com/qrwa5oq

It was important for us to make the drive to Sac not only because of the rally, but to tag team and meet with our lawmakers -- Assemblymembers and State Senators -- to express our thoughts and stories about AB5's impact on musicians (and writers, like myself). When it comes to constituent lobbying, it's just as powerful to meet with the chiefs of staff of the lawmakers, who are incredibly knowledgeable and have their ears to the ground on pending legislation, and they are often more accessible. We met with and delivered detailed formal letters about AB5 from a personal perspective to:

* State Sen. Anna Caballero (D-12) and her Chief of Staff Aracely Campa - YES on AB5;
* Chief of Staff for State Sen. Cathleen Galgiani (D-05), Bob Alvarez - YES on AB5;
* Chief of Staff for Assemblyman Heath Flora (R-12) - NO on AB5;
* Staffer for Assemblyman Adam Gray (D-21) - NO on AB5.

The conversations were illuminating, particularly with those who initially voted YES on AB5 -- and how ALL want major changes given the colossal, career-threatening problems it has created for independent contractors professionals. I'll probably do a writeup on my blog or for Freelancers Against AB5​. One of the members of the group, Peter Kalivas​, spoke at the event: https://youtu.be/KXi8mJYD9IM



All have heard from many, many constituents about repealing or amending AB5 so keep it up with the personal stories (NOTE TO MUSICIANS in District 5 -- Sen. Galgiani's rep had NOT heard from music professionals before Jeff and I walked through the door today).

There are quite a few bills submitted that will be evaluated by the end of February -- including repeal, additional exemptions, and a small business exemption -- those and a number of others will be in the mix.  We plan to do follow-up meetings with the lawmakers as bills move forward to get a clear sense of their positions on the options to deal with AB5.

All the conversations were polite and engaging, and they welcome you to contact and meet with them, either in their Sac or local offices. They really do appreciate constituents who take the time to do their homework on the issues. They need your input to stop this insanity.

How to find your lawmaker to write/call/visit with: http://findyourrep.legislature.ca.gov

NOTE: Contractor John Vogel (https://twitter.com/Vogel4Assembly) is running against AB5's sponsor, Assemblymember Lorena Gonzalez (D-80), and promises to fight to repeal AB5.

Learn more at my pad: http://www.pamspaulding.net/

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Good reads...  

• See Big Labor, the AFL-CIO, use a sockpuppet Twitter account to front for pro-AB5 "gig workers"
• California's AB5 - wreaking havoc for independent contractors 
• Independent contractors both helped and hurt by CA's AB5 (Pam)
• AB 5 - CA’s New Independent Contracting Rules (exemptions)
• Why misclassification is a problem
• Will This California Law End Freelance Work?
• What You Need to Know About the AB 5 “Business-to-Business” Exemption
• How a New Law Will Change California Show Biz
• Vox Media cuts hundreds of freelance journalists as AB 5 changes loom 
• Pam on Michelangelo Signorile Show re: AB5 (Dec 30). 
• What is independent contractor versus employee (State of CA FAQ)
• Employment Determination Worksheet (State of CA PDF checklist test)
• How to find your lawmaker to write/call: http://findyourrep.legislature.ca.gov

AB5: See the stories of independent contractor lives shattered by the CA law

The harm of AB5 on independent contractors is not an abstraction or a political football. One of the largest grassroots Facebook groups where discussion about the impact of the law is Freelancers Against AB5 -- a clearinghouse of education, information, and strategy for citizen activism of the self-employed harmed by the law. Moderator Karen Anderson took it upon herself to gather these emotion-filled stories of shattered careers - now up to 113 professions -- adversely affected by the law and place them into an accessible database: https://rolls.bublup.com/Anderson/AB5-Personal-Stories:

Hello Members. Here is our archives of personal stories documenting the negative impacts of AB5 categorized by profession. This is a continuing work in progress that I can add to or edit at anytime, so keep your stories coming! There are 113 categories of professions thus far that comprise hundreds of stories from our members. (Photographers, I need your stories.) Please share on social media and be sure to send this link to your representatives in the state legislature on Facebook, Twitter and email.

AB5 harms hundreds of thousands of independent contractors that rely on freedom to determine their rates of pay, when and how they work. When AB5 was debated, select professions were invited to petition, er, beg for exemptions, while others with the same functional business needs were not. That in itself is discriminatory. Now we see independent contractors’ careers halted in their tracks. Notably, even clients of professions exempted from the law are bailing, canceling contracts because of the legal uncertainty and potential liabilities.

SB459 has been on the books since 2012 and it already addresses misclassification in fields where it is rampantly abusive. I do not understand why AB5 was necessary to implement in such a damaging way to so many segments of the economy. AB5 at the very least should be amended to include an exemption for performing artists and no limited number of articles for writers or exemption for small business; however, in the larger scheme of things, I have come to believe only full repeal is a solution. We cannot be patient for months for a fix or to find a way to “adjust” when all of these taxpayers all have bills and must keep a roof over their heads.

NOTE: There is a rally and citizen lobby day at the Capitol in Sacramento on Tuesday, January 28 at 10 AM, sponsored by Assemblyman Kevin Kiley and Melissa Melendez, both Republicans, btw, though this is not a partisan issue. https://www.facebook.com/events/2577638375849505/

Since shuttering my national progressive political blog, Pam's House Blend, back in 2013, AB5 is the first topic to re-activate me because it runs at the foundation of what I have done as a working professional -- I've been a small business owner, an employee of a large company, and a freelance reporter and project manager as an independent contractor. I’m a Democrat from North Carolina that moved to CA in 2017. Little did I realize that too many lawmakers here have taken leave of their senses, only proving a supermajority of either party can result in bad lawmaking and a heavy hand. The Democrats at the state and national level need to understand this is no way to handle labor in an economy so diverse and evolving in its make up. A sledgehammer approach is not healthy or resembles anything remotely like common sense.

As my blogosphere colleague Markos Moulitsas at Daily Kos (no Red State or Town Hall, btw) made clear in his post, "Democrats across the country seek to make California's mistake, destroying careers of freelancers," legislation impacting people’s ability to live should never be made in an arbitrary manner as AB5 was, and current DNC Chair Tom Perez, when he was Barack Obama’s labor secretary, aggressively fined bad actors under existing fed law.

**

How to find your lawmaker to write/call: http://findyourrep.legislature.ca.gov

How they voted (and see how much money they received from Big Labor):
Sen Vote: https://legiscan.com/CA/rollcall/AB5/id/890316
Assm Vote: https://legiscan.com/CA/rollcall/AB5/id/890318

Just a reminder, folks. There is a federal labor bill that underscores the very ABC test that is decimating independent contractors here at the state level with AB5. It's H.R. 2474, and take a look and see who is co-sponsoring this bill.

https://www.congress.gov/bill/116th-congress/house-bill/2474/text 

Side note: Today I received a campaign call for my Congressman, Jim Costa, and said that I would not support his re-election if he supported HR 2474 as it stands affecting independent contractors. The polite caller took my information because at this juncture, he's not a co-sponsor.
So be ready to make your case now that the campaign calls are heating up.

How to find your lawmaker in DC to write/call about this legislation: https://www.govtrack.us/congress/members

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Good reads...  

• See Big Labor, the AFL-CIO, use a sockpuppet Twitter account to front for pro-AB5 "gig workers"
  
• California's AB5 - wreaking havoc for independent contractors 
• Independent contractors both helped and hurt by CA's AB5 (Pam)
• AB 5 - CA’s New Independent Contracting Rules (exemptions)
• Why misclassification is a problem
• Will This California Law End Freelance Work?
• What You Need to Know About the AB 5 “Business-to-Business” Exemption
• How a New Law Will Change California Show Biz
• Vox Media cuts hundreds of freelance journalists as AB 5 changes loom 
• Pam on Michelangelo Signorile Show re: AB5 (Dec 30). 
• What is independent contractor versus employee (State of CA FAQ)
• Employment Determination Worksheet (State of CA PDF checklist test)
• How to find your lawmaker to write/call: http://findyourrep.legislature.ca.gov

Fighting #AB5 - it may eventually lose in court, but how many careers will be destroyed in the interim?

AB5, the new law now in place here in California as of January 1, ostensibly passed to "protect" workers exploited by companies misclassifying them as independent contractors, has wreaked so much havoc that careers are being decimated -- contracts lost, potential gigs eliminated -- all because of a lack of understanding by lawmakers in support of it about the wide spectrum of the ways the "gig economy" works.

The one thing it is NOT is a partisan issue, though defenders of AB5 try to paint hard working professionals in opposition to AB5 as some sort of right-wing nutter base trying to flip the state Red. People and businesses across every demographic are hurt by a law passed by, yes, Democrats, but it's harming what is a natural target voter base as well. Markos Moulitsas at Daily Kos, no Red State or Town Hall, btw, made clear in his post, "Democrats across the country seek to make California's mistake, destroying careers of freelancers," that this now-national issue (see House Bill 2474) is an albatross around the necks of this state government and other states proposing AB5-clone bills.

Note that existing state law in California, and federal law, already punishes misclassification of employees as freelancers, when they should be employees. None other than DNC Chair Tom Perez, when he was Barack Obama’s labor secretary, aggressively fined bad actors. Meanwhile, Democrats across the country now are playing copycat to a law that its very own author, Assemblywoman Lorena Gonzales, admits was arbitrary. Literally.  "Was it a little arbitrary?” said Assemblywoman Gonzalez. “Yeah. Writing bills with numbers like that are a little bit arbitrary.”  

Legislation impacting people’s ability to live should never be arbitrary. 

One of the largest grassroots Facebook groups where discussion about the impact of the law is Freelancers Against AB5. It serves as a clearinghouse of education, information, and strategy for citizen activism of the self-employed harmed by the law. One member, Peter Kalivas, has spent a good time digging and researching how this misguided law will not stand legal muster and muses aloud why this bill exists at all. From his post (this group requires subscription/admission, I added ref links):

Everything I write is based on research I have done, and I could provide documentation to support my statements. 

In the opening text of the AB5 Bill/Law, the Dynamex court case is referred to as its inspiring incident. Therefore, I think it is important to review that case for context before I proceed with my feedback about AB5 - because it is relevant. 

The Dynamex court case decision was based on the complete opposite of the AB5 construct. Between 2004-2005, Dynamex de-classified employees WITH benefits into independent contractors with NO benefits, as an effort to save money. This case was brought by a small group of drivers who after 3 months of transition realized they preferred being employees, and filed a misclassification lawsuit. 

I have access to testimonials from other Dynamex workers who ultimately appreciated having the new option to accept and refuse work; due to the new flexibility independent contracting gave them. Ultimately, the court decision took away all Dynamex worker’s right to choose which employment situation they preferred resulting in the construct of the ABC test to more specifically determine what an employee was despite that already being defined at the federal level.
The Dynamex couriers who appreciated and preferred the transition into an independent contract have since spoken out against those who brought on the original court case. 

So the point of AB5 as a response to the Dynamex case is a very challenging rationale to resolve that elects for some less clear reason to take away the rightful and legal option for persons to choose their own working conditions that best suited THEIR needs. As a failed attempt to course correct the misclassification of workers, AB5 has confused what an “employee” is while separating U.S. citizens from their right to choose the conditions of how they choose to work under legal federal codes and allowances. 

So now there are multiple sources applied at the state level that have various definitions of what an “employee” is and what self-employed is. It could be presumed that our FEDERAL government’s definitions hold the highest authority over the State. But AB5 does not follow that rationale. 

The IRS was formed in 1862 and at the Federal level we have two classifications of work in the U.S. - Employee and Self-employed. And according to a 2019 survey in USA today 1/3 of Americans are independent contractors – thousands of people who contribute to the economic vitality of our country. 

As of today, the Internal Revenue Service (IRS) at IRS.gov defines an individual who works as an independent contractor or owns a business as a sole proprietor or partner is self-employed.

Furthermore, the California Employment Development Department at EDD.CA.gov takes its definition of self-employed from the IRS, which it must then use to follow the definition of what self-employment is - which is either: a self-employed individual, independent contractor, or general partner.

So with this in mind…why then, is a current State Assemblymember using the Dynamex case from 2005 to inspire the formation of AB5 in 2018? Perhaps the Labor Unions involved in AB5 think the now 14-year-old Dynamex case was an opportunity to manipulate the Federal definition of what “self-employed” means or doesn’t mean for a more defined purpose. 

Assemblymember Lorena Gonzalez-Fletcher (@LorenaAD80), can you please provide documentation that gives you the authority (as a state-level official), to obtain an exemption for the State of California to use a different definition of self-employment than the IRS? What gives the State of California the authority to use a different definition of employee or self-employed in any new way it wants, and one that is different than the highest level of government? 

The California EDD website states, “As of January 1st, 2020 all workers are now employees.” The term “worker” can either mean an “employee” or an “independent contractor.” Without justifying documentation to decipher which definition to use (EDD or IRS) - it is not convincing that AB5 is even legal or enforceable. 

Let me be clear, the Borello and the ABC tests were devised to determine what an employee was, NOT what self-employment was, because self-employment is already defined at the Federal level.
Applying theses tests to a person who has declared and can prove themselves, as defined by the IRS as self-employed is then irrelevant.
Next feedback point is that… 

AB5 contradicts itself and lacks an open transparent process in the following ways: 

In the opening text of AB5, it refers to WAGE ORDERS of which there are 17 that describe which fields and occupations are exempted already from employee status, including how and why. 

So, here is the contradiction within AB5… 

We have the Wage Orders referred to, (code 10-1002, a previously existing document applied to AB5 says Creatives and the Professional Performing Arts are already exempted from being defined as employees), and then we have a totally different document created for AB5 that does not exempt Performing Artists. Instead, it lists a Fine Arts exemption determined by privileged parties including representatives of labor unions through a conflicted process. 

The exemption process, I argue is contentious because we, (the workers of California), were not all equally privileged to understand, nor participate in the process of how exemptions were determined. All businesses (for profits and nonprofits alike) need be registered with the state, so we could have easily received a notification from the Secretary of State and/or Attorney General about how our specific business can go about seeking an exemption. 

Speaking of enforceable documents… 

SB 459 signed by Governor Jerry Brown in 2011 specifically deals with the overt misclassification of workers. When pressed about this bill, ASM Gonzalez-Fletcher stated SB 459 wasn’t enforceable and yet, there have been numerous court cases that clearly demonstrate that it has been. 

Several California Senators and Assemblymembers I have spoken to, publicly agree - including those who have since flipped to agreeing that AB5 may not be enforceable for the reasons I state. The state does not have higher authority than the federal government to redefine what an employee is, nor completely ignore the federal definition for self-employed. 

AND so before I ask my clarify question, here is my final statement:

I have demonstrated that I have spent time doing the investigative research relating to AB5; and I am not convinced the author, nor its sponsors have.

There are too many discrepancies that make this bill (which is now a law), challenging to acknowledge. 

AB5 is based on an assumption that self-employed people are in need of help from themselves because they are incapable of negotiating the terms and conditions of their own contracts to provide services of their own creation. Something 1/3 of self-employed Americans across the United States have CHOSEN to do for over 100 years. AB5 now takes away that legal choice for so many. 

One final thing the author does not understand or acknowledge is that long term, Full-Time jobs (with benefits), with one exclusive employer for Professional Performing Artists RARELY exists, with minimal exceptions including union jobs across the United States. Most artists work on a project, gig, event, short term, or seasonal basis - and this is standard practice in our industry. 

In closing, I would like to ask my one clarifying question:
What IS the real reason for AB5? 

Peter G. Kalivas, PGK DANCE!

My commentary/response after the jump...

AB5 battles - why pit segments of the self-employed against one another in the gig economy?

An unhelpful Tweet from the group Gig Workers Rising (@GigWorkersRise) that I responded to. https://twitter.com/GigWorkersRise/status/1215333011790561280

This isn't the time to pit one independent contractor group's rights over another's when the Gig Economy has different facets that were NOT acknowledged or accommodated by AB5. It's (exceedingly) bad law to boot, and to act as if the people hurt by AB5 are somehow to blame for incorrectly following the definition of an IC to begin with is horrendous.

But this is going to be hardball, online and offline, to right this ship. No one wins with acts like this. The best way to be effective is to communicate with and meet your lawmakers, write letters to the editor, and organize with positivity to assert why AB5 is harming your ability to make an honest living. http://findyourrep.legislature.ca.gov/

Side note: I looked up Gig Workers Rising, and gee, I'm sure it's a coincidence, but it's the same address of a chapter of the AFL-CIO-affiliated American Federation-Musicians that supported AB5. https://gigworkersrising.org/

And...

Why was AB5 needed when SB459 was already on the books?  Senate Bill No. 459, passed and has been law since 2012 addresses misclassification:

"California already has a worker misclassification law it’s not enforcing: California Senate Bill 459 is an existing law that makes it unlawful for companies to misclassify workers. This law puts its money where its mouth is. It gives the state Labor and Workforce Development Agency the power to fine companies $5,000 to $25,000 per violation for willfully misclassifying workers and allows the state Labor Commissioner to assess additional civil and liquidated damages.

The law has been in effect since January 1, 2012 but so far has not been used to challenge worker misclassification at Uber, Lyft, or other Gig Economy platform companies."