With the presidential election just around the corner, freelancers are starting to grow concerns about what the results may mean for their business. The big question is, will a Biden presidency put freelancers out of work?
Many individuals dependent on freelance gigs are wondering what former Vice President and Democratic candidate Joe Biden’s public support for AB 5 means for the future of their businesses.
AB 5 is a union-backed California law aimed at preventing the misclassification of rideshare drivers by giving them the status and protections of full-time employees. The California Legislature modified the law several times after taking effect on Jan. 1, 2020. This was in part due to the fact that AB 5 was putting many other types of freelancers out of work.
Biden supports a federal law similar to California’s AB 5
Freelancers are concerned because Biden is a strong supporter of unions and he wants a federal law similar to AB 5 that could place steep restrictions on who can be a freelancer.
More Americans are freelancing than ever before. So naturally, the future of freelance work is a primary concern for some workers as the presidential election approaches. A recent Upwork survey, Freelance Forward 2020 found that 59 million Americans did some form of freelancing in 2019. That’s up 2 million from the previous year.
Since taking effect on Jan. 1, 2020, AB 5 is an attempt to address inequities in the gig economy including the independent contractor policies of ride-sharing companies such as Lyft and Uber. It assumes that every worker in the state is considered an employee unless employers can prove otherwise using a strict “ABC test”.
The “B” portion of the test states that to be considered a contractor, a worker must perform work that is outside of the usual course of business for the hiring company. This makes it harder or impossible for many freelancers to work for clients in their own industry. Similar laws have been considered in other states such as New York and New Jersey. So far, these measures have been unsuccessful.
Biden encourages Californians to reject Proposition 22 that would overturn AB 5
On Election Day, California residents will now be asked to vote on Proposition 22, a ballot measure that would overturn AB 5. A group of rideshare and gig economy companies is investing more than $180 million to defeat it.
Proposition 22 would classify rideshare drivers to be independent contractors, rather than employees or agents. It would require app-based rideshare companies to provide a guaranteed minimum wage, a subsidy for health benefits, medical and disability coverage for workplace injuries, on top of added protection against harassment and discrimination. The measure would also help to benefit some freelancers who raised complaints about AB-5.
Biden has shown opposition to Proposition 22. He tweeted on May 26, the same day he was endorsed by the AFL-CIO, asking for Californians to vote no on this issue.
Biden supports the Protecting the Right to Organize (PRO) Act
What really concerns freelancers in other states is that Biden has expressed support for the Protecting the Right to Organize (PRO) Act. Sharing via Twitter on Sept. 7, he expressed his intention to sign the legislation and support for the Biden Plan for Strengthening Worker Organizing, Collective Bargaining, and Unions. The latter being shared on his campaign website. The PRO Act would use the same three-pronged ABC test as AB 5 to decide who is a freelancer nationwide.
A majority of Democrats support the PRO Act, which would weaken right-to-work laws in states that let employees opt out of participating in unions and paying union dues. Additionally, it would give the National Labor Relations Board (NLRB) the ability to penalize companies that retaliate against workers for organizing. It also gives collective bargaining rights to many workers who do not have them now.
In the current economic situation, many freelancers are placing lots of weight on this issue as the deciding factor in their November election decision. With Freelance work being the entirety of their income, many are faced with the decision of voting for or against having a salary in the next few years.
The Trump Administration’s Stance
The Trump administration has also taken a position on worker classification. In September, the Department of Labor proposed a new rule to clarify employee and independent contractor status under the Fair Labor Standards Act. The rule would adopt an “economic reality” test that looks at whether workers are in business for themselves or are economically dependent on the employer for work. This decision of whether they are in business for themselves would depend on the nature and degree of the workers’ control over the work and the opportunity for profit and loss based on initiative and investment.
The analysis would also look at the amount of skill required for the work, the degree of permanence of the working relationship between the worker and the hiring entity, and if the work is an “integrated unit of production.” The 30-day comment period on the rule ends on Oct. 26, 2020.
Freelancers Union executive director Rafael Espinal commented more education regarding freelancers’ livelihood is necessary. While the group’s membership skews Democrat, Espinal said many freelancers generally don’t feel represented by either party.
A grassroots movement is underway
The Freelancers Union is actively reaching out to legislators to ensure they are aware of the potential impact the PRO Act on its members. On Sept. 10, the Freelancers Union held a town hall with Senate Minority Leader Chuck Schumer (D-NY). The group raised concerns about the PRO Act at the meeting. “He’s committed to working with us and making sure we don’t have the same outcome that came out of California at the federal level,” said Espinal.
The Freelancers Union continues to plan additional outreach to other legislators.
With so many people losing jobs or forced to find more flexible work arrangements due to the coronavirus pandemic, the issue of worker classification is likely to increase in importance in the next few years.
Espinal added, “I expect the number of freelancers to grow after the pandemic, given previous trends. After 2008, there was a huge increase in the number of people who decided to go freelance.”