Uber, Lyft Escape California’s Crackdown — but Law Will Continue to Devastate Gig Economy
Voters in California approved Proposition 22 by a wide margin last week, a ballot initiative that would exempt Uber, Lyft, and other ride sharing and delivery providers from having to reclassify their drivers as employees.
Proposition 22 came in response to Assembly Bill 5 (AB5), a California law that imposed some of the most significant restrictions on independent contractors in American history.
The law intended to force businesses such as Uber and Lyft to hire freelance workers as employees with health care and other employment benefits typically afforded to full-time employees. Several states are considering AB5-copycat legislation, and Joe Biden endorsed it. But the law doesn’t just target wealthy, big tech companies such as Uber and Lyft. In California, it encompassed the state’s entire gig economy, forcing millions of independent workers into making an all-or-nothing choice about whether to become a full-time worker or not to work at all. In addition to sending thousands of California workers to the unemployment line, AB5 restricted the ability of business owners to employ them, causing many of them to suffer and even consider shutting down.
The law has been so devastating on the state’s gig economy, dozens of politically connected professions — musicians, translators, writers, producers, and photographers — have successfully lobbied for exemptions. The fight for special exemptions isn’t cheap: Uber, Lyft, Postmates, Instacart, and DoorDash spent a whopping $200 million to support Proposition 22.
While it’s nice that industries with big microphones and deep pockets were able to successfully lobby for carve-outs, the devastating effects of AB5 persist for thousands of independent workers and small-business owners throughout the state.
Monica Wyman, a wedding florist in southern California, is one of them.
“I don’t even have the words to explain how bad this has been for our family,” Wyman said of AB5. “I’m at this crossroads where I’m thinking I’m going to have to dissolve my business and close my doors.”
Two decades ago during the Great Recession, Wyman couldn’t find a job. She had three young children, a ten-year lapse in work experience, and no college degree. After being turned down by her local Starbucks, she eventually convinced a small flower shop to hire her at minimum wage. “I loved it,” she said. “I’m somebody who entertains and hosts frequently, and the flowers and parties were appealing to me.”
After watching her boss decline requests for private events, Wyman decided to pursue her own slice of the American dream. In 2009, she founded RSVP Floral Designs, a small business that makes flower arrangements for weddings and other special events.
The flexibility of working for herself enabled Wyman to contribute to her family’s finances while still being the primary caregiver for her children. It also allowed her to take a step back from working in 2016, when she faced a three-year battle with breast cancer.
Because weddings are sporadic and seasonal, Wyman didn’t have enough work to hire traditional employees. She instead would hire moms as independent freelancers ahead of big events.
“I would rotate in different moms who I knew wanted a few hours here and there. It worked really well for all of us,” she said. “These are women who need the flexibility.”
Under AB5’s strict conditions, however, Wyman’s entire business model is in danger. She can no longer hire moms to freelance for her because the role they’d fulfill fails to pass AB5’s strict test, which requires that independent contractors perform work “that is outside the usual course of the hiring entity’s business.”
“I can’t hire freelancers to help me get the job done,” she said. “That’s a huge challenge to not be able to hire someone per event.”
In the Fall of 2018 after recovering from breast cancer, Wyman faced yet another setback: Doctors diagnosed her with a degenerative joint disease, which makes physical labor impossible on certain days.
“I don’t know when those days are going to come,” Wyman explained. “There’s weekends when I have a small wedding booked, and there’s days when I can’t walk or get up and down a ladder to decorate an arch.”
Earlier this summer, Wyman was preparing for another major surgery related to her fight with breast cancer.
“I don’t get to hire in someone to fill in for me,” she said. “That’s really unfair.”
All this has left Wyman relying on her children for help when they’re home from college or on her husband, who already works a full-time job. Stretched thin, she’s now confronting the reality that she might have to permanently close her doors.
“I should not have to close my business because I cannot hire in extra help on occasion,” she said.
In August, Uber and Lyft faced a similar fate, claiming they would be forced to shut down services without relief from AB5. Thanks to the $200 million Proposition 22 campaign, they no longer have to worry about that prospect. They ought not forget, though, that many of their potential clients — folks who freelance or may own small businesses themselves — weren’t offered that same relief. Indeed, let’s hope they continue the fight and stand up for the little guys such as Monica Wyman, who just wants to run her flower business — and for all the moms who used to work for her.
*By Kelsey Bolar via National Review*