I was alerted to changes in the law for small business and Independent Contractors only a week ago. I started to look into it to see what was going on. At first I thought it only affected Uber and Lyft drivers, surely not me. In fact I had basically ignored the few news stories I had seen last year when the legislation was first introduced, because I wasn't in that industry. Boy was I wrong, this totally affects me. Not only me, but thousands of other small business of all kinds that have nothing to do with the ride share industry. 

The California bill that was signed into law September 2019 is so poorly constructed creating too many gray areas that need to be interpreted. The new law states ALL workers in California are to be be classified as an employee unless they meet certain criteria. That criteria has been made so strict that essentially very few businesses and service providers can meet it. Because of that, the lawmakers wrote into the law all of the professions that can be excepted. These exemptions are up to the lawmakers as to who can work now as an independent contractor. People are now trying, begging, to be added to the list of exempt professions as hundreds are not on the list. The law should not need so many exemptions.

​Even if you are on the list your are still at risk of violating some parts of the legislation. Due to the language of this law people who have nothing to do with the reason the existing law was changed are the fallout. If you have a business that misclassifies a service provider under the new criteria and pays them for an occasional gig, they can be fined anywhere from 5K to 25K per contract. Small businesses, can't take the risk and are just opting to not hire an independent contractor. The only way to be safe is to completely change the business and hire someone as an employee. If your business is fledgling and you can not afford that your are essentially out of business. Anyone you used to pay for their service is also out of business.

Here is a scenario. A few years ago 2 friends got an idea to start a small business together. They were both "artists" (which by the way they are on the current exempt list which did not exist then). They thought, how can we create a business to bring more art to our community, provide work and a source of income for other artists, how can we provide a place to teach all different types of art to people? They brainstormed a lot and dreamed a lot. Both were independent contractors and used to entering into individual contracts with individual clients. They formed a partnership and set up a business using about 50 different "artists" to come to one location on an agreed upon time and for an agreed upon fee, and teach a class in their own way. They were not employees. Most offered their service to teach a class only on occasion, if it fit into their own schedule.. The 2 artists each also taught classes and earned income that way. The small business provided the location for the class to take place, provided the advertising, and collected the fees for each class. The individual artists teaching their own class were paid the agreed upon fee, they were issued a 1099 at the end of the year. The business only made enough to pay the cost of staying in business. The independent contractors who did the teaching were not exploited and lots of people enjoyed taking lots of different classes and learning new skills. There were school programs, after school art and summer camps for kids too. Everything benefitted everyone. So why is it now breaking the law? Who was being exploited?

Since that is supposedly what this AB5 is touted to be doing, helping, how is shutting down a business like this helping? Who is being helped? The artists who occasionally teach don't necessarily want to be employees. But let's say they were. Anything they created as an employee they could lose the rights to. The same goes for the other arts like music. Not all people should be employees, but they still have a right to earn a living. If this law was not intended to affect small businesses like this one, it needs to be rescinded. Don't fix what isn't broken as the adage says.  

Everyone with a skill or a service to offer does not need to be an employee working for a business. It is the American way! Freedom to choose your own livelihood is the hallmark of a free society. Now this small business could be at risk of being punished with large fines due to the new law and the convoluted way it is written. Even though "fine artist" is on the exempt list, the law is unclear. This small business has nothing to do with the ride share industry that was given as the reason for changing existing law. There were no workers being treated as employees yet misclassified as independent contractors and denied protections and minimum wages. They were earning more than minimum, they were happy to get the gig.

Artists of all kinds have always had a hard time finding full time employment doing what they love to do. There are a few rare companies that hire on artists, Walt Disney comes to mind. I don't know if they were paid as employees or IC's back when he first started. But even Walt Disney started small. Pretty much every business starts small. If an artist, like me, couldn't find "a real job" I always knew I could work for myself. Now with this new legislation it makes it even harder for artists to work and get paid. Is that really what the legislators intended?

Some say since the author of the bill is paid for by unions, and she was given very large contributions to her election campaign, she is motivated to have more people be employees and ultimately pay to join unions. Some people say that the government wants businesses to pay more fees to be in business. Revenues will increase this way. And 20 million dollars has been added to the new law to finance the crack down on businesses misclassifying people. The fines for a first time mistake start at 5K, more than fines for real crimes, like assault, theft or dui's.
So something that probably didn't need fixing was fixed anyway and it made life worse for thousands of people doing their own thing, not harming anyone.   

And the art business started by 2 friends? We have to wait and see if California legislators do the right thing and repeal this law.

I was telling a friend about all this and she said why? Why did they change the law? Why are they now fining people such huge fines for something that used to OK? I said that they say it is to help people to not be taken advantage of and everyone deserves a minimum wage job at the very least. But I wonder, when they see so many people that didn't need or want help,  losing their livelihood, why don't they fix it? 
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