Warnings from California, the Harms of Attacking Entrepreneurs
Liam Murphy works as a freelance architectural designer. While he worked to complete the licensing requirements required by California, including national and state exams and logged hours, Liam had been contracting with a San Francisco architectural firm.
Freelancing gave him the flexibility to prepare for his licensing exams, earn money, and manage a family design project, and was beneficial for his employer to have an experienced, trusted contractor without the training investment and overhead costs.
Unfortunately, after the passage of Assembly Bill 5 *(see definition below), Liam’s contract was placed on indefinite hiatus. The firm cited the bill’s gray area as a risk of potential litigation if they continued to pay Liam. Liam has been forced to devote time to unpaid research instead of paid work as he decides whether or not to form a corporation to meet the criteria of AB5.
For Liam, the worst part of AB5 is the bill’s treatment of contractors as freeloaders and the insinuation that freelancers are not smart enough to make their own decisions about how to work. Liam’s work situation had been perfect for him—until the government told him that they knew better.
*Assembly Bill (AB) 5 was recently signed into law in California and has had devastating effects on independent contractors and freelancers in the Golden State. AB5 replaces the common law test with the ABC test to determine whether a worker is an employee or independent contractor. Since the law went into effect on January 1, 2020, hiring entities are now required to classify workers as employees unless they meet all conditions of an ABC test.