In 2019, I was a California writer-consultant, reinvention coach and E-RYT 500 yoga instructor and programs lead whose life was upended by the passage of Assembly Bill 5 (AB5) into law. This so-called gig workers law was a sop to the labor unions that control the state and single-handedly outlawed independent contracting. Over 600 professions were affected, and the careers of 4.5 million self-employed, independent contractors, and entrepreneurs were destroyed overnight.
An exemption (AB2257) was offered a year later, but it only allowed me to continue my work as a journalist — and barely that. Since AB5’s passage, many national and international companies wouldn’t touch California writers. As for my reinvention clients and yoga work? It was gone — $2,000 a month in income that was no longer accessible, with no way to recoup.
After three years, my husband and I fled California and moved to Alabama, a right-to-work state that respects independent professionals and encourages small businesses to thrive. Sadly, AB5 and its damage continues to chase after me.
If you thought AB5 was just a California problem, it is now on your doorstep. When it comes to bad politicians and bad legislation, what happens in California seldom stays in California.
On Jan. 10, 2024, the United States Department of Labor issued its final Independent Contractor Rule, which uses the ABC Test at the heart of AB5 — the same ABC Test that a majority of independent professionals could never meet — as a model for its six-pronged requirements that self-employed individuals and small businesses have to meet in order to be designated an independent contractor or to contract with someone who works independently.
This rule will replicate the adverse economic and career impacts caused by AB5, upending and outright destroying the nation’s 64 million independent professionals, small-business owners and entrepreneurs. About 30 million of that number are women: women who are single mothers, caregivers and senior citizens who require freedom, flexibility and innovative ways to maximize their earning potential. This rule will stop innovation in its tracks, not to mention American livelihoods.
AB5 purported that independent contractors would be properly classified as employees with “the basic rights and protections they deserve under the law: a minimum wage, workers’ compensation if they are injured on the job, unemployment insurance, paid sick leave, and paid family leave.” It did the opposite.
A new study by the Mercatus Center shows that AB5 not only destroyed independent contractor work, but overall employment. Institute senior fellow Liya Palagashvili and her fellow researchers examined through empirical means how AB5 affected the labor market. Despite AB5 proponents’ claims that the law would increase full-time employment and offer benefits and protections, the researchers found “robust evidence that AB5 is significantly associated with a decline in self-employment and a decline in overall employment.” AB5 reduced the level of self-employment by 6.7 percentage points, to 28 percent, and the level of overall employment by 7.3 percentage points, to 14 percent.
The study also showed that self-employment fell 10.5 percent. In California, AB5 had a chilling effect that resulted in a reduction in labor overall. Now imagine that happening across the remaining 49 states.
Get the picture? It’s not a pretty one.
The rule is slated to take effect on March 10. U.S. Sen. Bill Cassidy (R-La.) and Rep. Kevin Kiley (R-Calif.) have both declared they will use the Congressional Review Act to have this rule rescinded. Previous legislation has been tendered in support of small businesses and the self-employed. The “Fight for Freelancers” group of female writers and editors has filed a lawsuit challenging this rule, which serves to appease Big Labor in the same manner as AB5.
I have fought against AB5 for five years, with very few resources and, at the beginning, very few allies. I have used my journalism skills and voice to write articles and document the damages that AB5 rendered in the lives of my fellow independent professionals, and other legislation, like the Protecting the Right to Organize (PRO) Act, that a Democrat Congress unsuccessfully attempted to ram through in 2021. I have been a part of press conferences and have offered testimony to the U.S. Department of Labor and other venues on the harm these adversarial laws and rules cause women, senior citizens and especially minorities.
This administration is constantly harping about equity, diversity and inclusion. Yet, these attempts to force independent professionals into a caste system that the government creates — where you are only allowed to work in professions or through the means it chooses — only kill diversity, deepen exclusion, and are nowhere close to creating equity or equality.
Jennifer Oliver O’Connell is a small-business owner, entrepreneur, independent contractor and visiting fellow with the Center for Economic Opportunity at Independent Women’s Forum.