The Four-Year Battle for Self-Employment
On September 14, 2019, the WSJ Turned California's AB5 and the ABC Test into a National Struggle
It started small, like so many California problems, as an overlooked in-state legal change.
That summer, the California Assembly reported out a supposedly minor labor-law revision nicknamed AB5, short for Assembly Bill 5.
Reading like a sloppy homework paper, AB5 was long, disorganized, poorly written, and confusing. AB5 was pitiless toward individuals working to get into or stay in the work force..
The bill attempted to prevent individuals in over 660 affected occupations from working under short-term contracts. Its sponsors reported "no problems" with identical wording in Massachusetts, from whose General Laws the key text was copied.
The most lethal wording is called the ABC Test since it prohibits part-time and project work using three vague limitations:
-- no buyer control or direction,
-- dissimilar to the buyer's "usual course of business," and
-- offered by an established business.
All three requirements must be met or the buyer will be severely penalized, even though the terms are poorly defined.
The Wall Street Journal got wind of the AB5 bill while it was in committee, and published a long, frustrated editorial on August 30th, 2019, pointing out major weaknesses of the bill. But the last week of August is vacation time, and California still had its glow.
How much has changed! Two weeks later, the Journal published New Jobs' letter to the editors, explaining the deeply flawed ABC Test was a radical revision that had, in fact, harmed Massachusetts through the judicial system. With that small move, the Journal signaled that this was a coming national battle, more than a state mistake.
The Journal proved prescient. Since then, millions of Californians have lost their livelihoods, and an astonishing Congressional-seat load of residents have moved out of California to other states—more than 700,000 individuals.
The California wording was incorporated into a huge pro-labor union bill named the PROact, which failed three times to make its way out of Congress. The PROact's most ardent supporter, AFL-CIO head Rich Trumka, passed away of heart failure during the struggle for Congressional passage.
California freelancers, gig workers, franchisees, and professionals in hundreds of occupations pushed back against AB5 and resisted so strongly that 100 occupations were exempted from coverage, leaving over 500 still afflicted. AB5's author resigned her seat as Chair of the Assembly Appropriations committee during the uproar and, after a long pause, took over the head position of the California Federation of Labor. A Federal Appeals Court pointedly accused her of unconstitutional behavior in drafting and amending her bill.
The Presidency switched from Republican to Democrat and the current president is still supporting the PROact and the ABC Test. He continues trying without success to get a replacement approved to permanently fill the Secretary of Labor position. Same-party opposition to her appointment appears resolute.
Opponents of crushing labor laws have worked together effectively for four years, continually finding weak points in union proponents' strategies and tactics and using social media and other channels to make their resistance felt. The ABC Test has become so toxic, it cannot even be inserted in plain language into expected labor-regulatory revisions.
These outcomes were unimaginable four years ago, when AB5 and the ABC Test were unfamiliar terms. As New Jobs said in closing its letter to the Journal editors. "This law harms everyone it touches."