Christy Smith Voted for Job-Killing AB5, a New Law

Hit- Christy Smith voted for job-killing AB5, a new law which could devastate the gig economy, lower wages for working people, and cause hundreds of thousands of workers to lose their jobs in California.

Backup:

Christy Smith voted in favor of Assembly Bill 5, a bill having to do with worker status and the classification of employees and independent contractors:

• Christy Smith voted in favor of Assembly Bill 5 on May 29, 2019.

(AB-5 Worker status: employees and independent contractors, Y:59 N:15 NVR: 6, Christy Smith Voted Yea, California Legislative Information, 05/29/19)

• Christy Smith voted in favor of Assembly Bill 5 on September 11, 2019.

(AB-5 Worker status: employees and independent contractors, Y:61 N:16 NVR: 2, Christy Smith Voted Yea, California Legislative Information, 09/11/19)

• On September 18, 2019, Governor Gavin Newsom signed into law a bill that would make it much more difficult for companies to classify employees as independent contractors. “On Sept. 18, Gov. Gavin Newsom signed into law a bill that will make it much more difficult for companies to classify the people who work for them as independent contractors.” (Michael Farren and Trace Mitchell, “Assembly Bill 5 is bad for Uber and Lyft, but it will be worse for workers,” The Orange County Register, 09/30/19) • AB5 reclassified gig workers as employees. “AB 5 is the first piece of legislation looking to reclassify gig workers as employees. The companies most affected by this bill are ride- sharing kings Uber and Lyft, along with delivery services, such as DoorDash.” (Expert Panel, “How California Assembly Bill 5 Affects The Gig Economy,” Forbes, 01/10/20)

• The bill may impact thousands of self-employed individuals and could have a “devastating” effect on technology companies such as Uber, Lyft, and Grubhub. “The bill, which went into effect this month, may impact thousands of self-employed individuals and could have a devastating effect on many new and popular technology companies, such as Uber, Lyft and Grubhub.” (Expert Panel, “How California Assembly Bill 5 Affects The Gig Economy,” Forbes, 01/10/20)

• It is possible many gig economy workers could lose their jobs because of the costs involved in converting gig workers to employees. “In addition, it is possible that many gig economy workers could lose their jobs because of the costs involved in converting gig workers to employees.” (Expert Panel, “How California Assembly Bill 5 Affects The Gig Economy,” Forbes, 01/10/20)

• Lower wages and fewer jobs could harm many workers in the gig economy using it to supplement their own forms of employment. “The lower wages and fewer job opportunities tend to harm the people who are already struggling. Many individuals working in the gig economy are using it to supplement their other—often more substantive and regular—forms of employment. A MetLife report found that “15 million workers supplement ‘traditional’ full-time work with ‘gigging/freelancing.’”” (Michael Farren and Trace Mitchell, “Assembly Bill 5 is bad for Uber and Lyft, but it will be worse for workers,” The Orange County Register, 09/30/19)

• Some of the higher costs could be passed on to customers, leading to fewer gig economy jobs. “Some of the higher costs will inevitably be passed on to customers. Uber and Lyft, for example, have yet to earn a profit, and there’s already little organizational fat to trim. The higher prices will also decrease the amount of gig economy services—transportation, delivery, odd-jobs, and many other things—that customers buy, which will lead to fewer gig economy jobs, too.” (Michael Farren and Trace Mitchell, “Assembly Bill 5 is bad for Uber and Lyft, but it will be worse for workers,” The Orange County Register, 09/30/19)

The Executive Director of the California News Publishers Association said he suspected “there are thousands of freelance jobs in California that will be negatively affected by this law…” according to a report by the New York Post:

• The Executive Director of the California News Publishers Association said he suspected there are thousands of freelance jobs in California that will be negatively affected by this law.” “Longstanding relationships are being threatened,” said Tom Newton, executive director of the California News Publishers Association. “I suspect that there are thousands of freelance jobs in California that will be negatively affected by this law.” (Keith J. Kelly. “California’s contagious freelancers law spreading to New York,” The New York Post, 12/19/19)

• Industry watchdogs said the bill in California could end up wiping out thousands of freelance jobs. “Industry watchdogs say the bill in California, which could end up wiping out thousands of freelance jobs, could also be copied in New York, potentially threatening the livelihood of thousands more writers and photographers.” (Keith J. Kelly. “California’s contagious freelancers law spreading to New York,” The New York Post, 12/19/19)

According to a report by Mercury News, Lyft has 300,000 drivers in California which could find themselves out of work due to AB5:

• Lyft has 300,000 drivers in California which could find themselves out of work due to AB5. “AB 5 has been under assault from Uber and Lyft, which are urging drivers and riders to contact their lawmakers to oppose it because they say it would lead to a drastically reduced driver base — Lyft released a study this week saying 300,000 of its drivers in California could find themselves out of work — and mean higher prices for riders who use their services.” (Levi Sumagaysay, “Uber, Lyft drivers a step closer to being classified as workers,” The Mercury News, 08/30/19)

According to a post by the Foundation for Economic Education, Uber and Lyft were set to entirely shut down in California due to AB5, which would leave hundreds of thousands of drivers unemployed during the coronavirus pandemic:

• The headline from the post.

(Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• Uber and Lyft were set to entirely shut down ride-sharing operation in California. “This Friday, Uber and Lyft are set to entirely shut down ride-sharing operations in California.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• The businesses’ exit would leave “hundreds of thousands” of drivers unemployed and millions of California chasing for an expensive cab. “The businesses’ exit from the Golden State will leave hundreds of thousands of drivers unemployed and millions of Californians chasing an expensive cab.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• The California state legislature passed AB5, a now-infamous bill restricting independent contracting and freelancing across many industries. “In September of 2019, the California state legislature passed AB 5, a now-infamous bill harshly restricting independent contracting and freelancing across many industries.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• The law mandated that ride-sharing apps such as Uber and Lyft reclassify their drivers as full employees while providing health care, benefits, and paying additional taxes. “By requiring ride-sharing apps such as Uber and Lyft to reclassify their drivers as full employees, the law mandated that the companies provide healthcare and benefits to all the drivers in their system and pay additional taxes.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• The unintended consequences may end up destroying the gig economy. “Legislators didn’t realize the drastic implications their legislation would have; they were simply hoping to improve working conditions in the gig economy. The unintended consequences may end up destroying it instead.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• A judge ordered that Uber and Lyft comply with the regulation by August 20, 2020. “AB 5 went into effect in January, and now, a judge has ordered Uber and Lyft to comply with the regulation and make the drastic transformation by August 20.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• The companies were shutting down operations in California since compliance is unaffordable. “Since compliance is simply unaffordable, the companies are going to have to shut down operations in California.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• Their entire business model was based on independent contracting. “Their entire business model was based upon independent contracting, so providing full employee benefits is prohibitively expensive.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• Converting their workforce in California to full-time employees would cost approximately $3,625 per driver. “Neither Uber nor Lyft actually make a profit, and converting their workforce to full-time employees would cost approximately $3,625 per driver in California.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• These working Californians would lose their source of income during a pandemic and recession, due to Sacramento regulators. “These 220,000 working Californians will now lose their source of income in the middle of a pandemic and recession, all thanks to the naive intervention of Sacramento regulators who thought they could plan the market.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

• Millions of Californians who rely on cheap, accessible ride-sharing services will be out of luck. “Moreover, the millions of Californians who benefit from and rely on cheap, accessible ride-sharing services will be out of luck.” (Brad Polumbo, “Why Uber and Lyft Are about to Shut Down All Operations in California,” The Foundation for Economic Education, 08/18/20)

In an article posted by Yahoo Finance, AB5 would cost Uber and Lyft an additional $3,625 per driver:

• The headline from the article.

(Alison Griswold, “How much it would cost Uber and Lyft if drivers were employees,” Yahoo Finance, 06/14/19)

• AB5 would have Uber and Lyft classify their drivers as employees, instead of as independent contractors. “A bill passed by the California Assembly seems likely to classify Uber and Lyft drivers as employees, instead of their current status as independent contractors.” (Alison Griswold, “How much it would cost Uber and Lyft if drivers were employees,” Yahoo Finance, 06/14/19)

• According to the article which references a report by Barclays, reclassifying workers would cost Uber and Lyft an additional $3,625 per driver in California. “In a report earlier this week, equity research analysts at Barclays estimated that reclassifying workers could cost Uber and Lyft an additional $3,625 per driver in California. That’s enough to boost Uber’s annual operating loss by more than $500 million and Lyft’s by $290 million.” (Alison Griswold, “How much it would cost Uber and Lyft if drivers were employees,” Yahoo Finance, 06/14/19)

According to a report from the Long Beach Business Journal, the coronavirus and AB5 delivered a one-two punch to the event industry:

• The coronavirus and AB5 delivered a one-two punch to the event industry, according to a report from the Long Beach Business Journal.

(Alena Maschke, “Coronavirus and new independent contractor law deliver one-two punch to event industry,” Long Beach Business Journal, 03/17/20)

• According to the article, it was a tough few months for the event industry in California. “It’s been a tough few months for event organizers in California.” (Alena Maschke, “Coronavirus and new independent contractor law deliver one-two punch to event industry,” Long Beach Business Journal, 03/17/20)

• Two festivals were cancelled as a result of AB5. “Earlier this year, several festivals, including the Lake Tahoe Jazz Festival and the Northern California Pirate Festival, announced the cancellation of this year’s festivities as a result of the state’s new independent contractor law.” (Alena Maschke, “Coronavirus and new independent contractor law deliver one-two punch to event industry,” Long Beach Business Journal, 03/17/20)

• Many in the event planning industry bemoaned the impact AB5 has had on their ability to attract and retain clients. “But many in the event planning industry, including Louros, have bemoaned the impact the new law has had on their ability to attract and retain clients.” (Alena Maschke, “Coronavirus and new independent contractor law deliver one-two punch to event industry,” Long Beach Business Journal, 03/17/20)

• Cancellations due to the coronavirus had further decimated business opportunities, according the report. “Over the past month, cancellations due to the emergence of the new COVID-19 coronavirus have further decimated business opportunities for event professionals across the state.” (Alena Maschke, “Coronavirus and new independent contractor law deliver one-two punch to event industry,” Long Beach Business Journal, 03/17/20)

Vox Media laid-off hundreds of freelance journalist due to AB5:

• Vox Media cut hundreds of freelance journalists to comply with AB5.

(Suhauna Hussain, “Vox Media cuts hundreds of freelance journalists as AB5 changes loom, The Los Angeles Times, 12/17/19)

• Vox Media said it would end contracts with hundreds of freelance writers and editors in California as the company came into compliance with AB5, which could have forced it to reclassify contractors as employees. “New York-based Vox Media said Monday it would end contracts with hundreds of freelance writers and editors in California who covered sports for the blog network SB Nation as the company came into compliance with the law, which could have forced it to reclassify some of these contractors as employees.” (Suhauna Hussain, “Vox Media cuts hundreds of freelance journalists as AB5 changes loom, The Los Angeles Times, 12/17/19)

• Vox Media said it would end contracts with about 200 people. “Vox Media will end contracts with about 200 people, including non-California freelancers who cover teams based in the state, and replace them with 20 new part-time and full-time staffers, according to a source familiar with the decision.” (Suhauna Hussain, “Vox Media cuts hundreds of freelance journalists as AB5 changes loom, The Los Angeles Times, 12/17/19)

• Under the new AB5 law, freelance writers could only maintain their status as independent contractors only if they submit no more than 35 pieces per year. “In a memo to 2,000 SB Nation contractors scattered across the country — most of whom will not be affected by the changes — Ness explained that, under the law, California freelance writers can maintain their status as independent contractors only if they submit no more than 35 pieces per year.” (Suhauna Hussain, “Vox Media cuts hundreds of freelance journalists as AB5 changes loom, The Los Angeles Times, 12/17/19)

• Rebecca Lawson, who covered the NBA’s Dallas Mavericks and was based in San Diego, was forced to step down as editor in chief of Mavs Moneyball by the end of March. “Rebecca Lawson, who is based in San Diego and covers the NBA’s Dallas Mavericks, wrote in a blog post Monday that she was told that she could no longer hold a paid position with SB Nation and would be forced to step down as editor in chief of Mavs Moneyball by the end of March.” (Suhauna Hussain, “Vox Media cuts hundreds of freelance journalists as AB5 changes loom, The Los Angeles Times, 12/17/19)

• Rebecca Lawson blamed AB5 and called it “terrible.” “She wrote that she didn’t blame SB Nation for doing “the easiest thing they can to comply with California law.” “Personally, while the extra income helps my family, it doesn’t break us to lose it. But I have literally HUNDREDS of amazing colleagues all across our network who DO rely on this money to help, and who are going to have to replace that income somewhere else, somehow. That sucks. So much,” Lawson wrote in the post, which was titled “California’s terrible AB5 came for me today, and I’m devastated.”” (Suhauna Hussain, “Vox Media cuts hundreds of freelance journalists as AB5 changes loom, The Los Angeles Times, 12/17/19)

• Emma Gallegos, a freelance writer and editor in Bakersfield, found out she didn’t qualify for a job because she lived in California, due to AB5. “Emma Gallegos, a freelance writer and editor in Bakersfield, said on Twitter that she studied for a copy editing test over the weekend only to find she didn’t qualify for a job at an unnamed company because she lived in California. “Add this to the #AB5 pile of rejects. I want to scream,” she tweeted.” (Suhauna Hussain, “Vox Media cuts hundreds of freelance journalists as AB5 changes loom, The Los Angeles Times, 12/17/19)

Although the bill was meant to help workers, companies responded by slashing jobs for freelance workers altogether:

• Although the bill was meant to help workers, companies responded by slashing jobs for freelance workers altogether right before the holidays. “California lawmakers meant for the new law, Assembly Bill 5, to help Uber and Lyft drivers get more pay and benefits for working long hours. But instead, to save money, companies responded by slashing jobs for part-time and full-time freelance workers altogether — right before the holidays.” (Allana Akhtar, “It feels cold and heartless”: Hundreds of California freelancers have been fired before the holidays over a state law meant to help Uber and Lyft drivers,” Business Insider, 12/18/19)

• Many people work as freelancers because they are disabled or otherwise can’t easily work in an office.

(Allana Akhtar, “It feels cold and heartless”: Hundreds of California freelancers have been fired before the holidays over a state law meant to help Uber and Lyft drivers,” Business Insider, 12/18/19)

• Of the 57 million gig workers in 2019, 46% said they chose to freelance because they were unable to work in a traditional employer due to personal circumstances. “Of the 57 million gig workers in 2019, 46% said they chose to freelance because they were "unable to work for a traditional employer due to personal circumstances," according to an annual study from the gig-work marketplace Upwork. Alisha Grauso, a coleader of California Freelance Writers United, said freelancers were more likely to be disabled or older.” (Allana Akhtar, “It feels cold and heartless”: Hundreds of California freelancers have been fired before the holidays over a state law meant to help Uber and Lyft drivers,” Business Insider, 12/18/19)

AB5 could mean the death of the franchise model in California which supports 728,000 jobs in California alone:

Editor’s Note: There was no exemptions made to the franchise model in California under AB5. Exemptions were made for doctors, insurance agents, securities brokers, accountants, barbers, and hairstylists as well as other professions.

• According to the International Franchise Association, AB5 could mean the death of the franchise model in California which supports 728,000 jobs in California alone.

(Assembly Bill 5 Letter, International Franchise Association, 08/27/19)

• Franchisors & freelance workers fought AB5, according to an article from March 2, 2020.

(Amanda Venegas, “Franchisors & freelance workers fight AB5,” ABC 30, 03/02/20)

• Franchise leaders warned that AB5 is likely to have a major impact on the current franchise model in California. “Franchise leaders and attorneys are sounding the alarm on California Assembly Bill 5 (AB-5), to become effective on January 1, 2020. They are warning the franchisor community that the new law is likely to have a major impact on the current franchise model regarding relationships with their franchisees who have long been labeled as independent contractors.” (Janet Sparks, “Franchising Braces for 2020 California AB-5 Law Regarding Misclassification of Workers,” Forbes, 10/09/19)

• The bill’s far-reaching changes could be detrimental to the franchise model. “A webinar presented last Thursday by Gray Plant Mooty, titled Impact of California’s Assembly Bill 5 on Franchisors, warned that the bill’s far-reaching changes could be detrimental to the franchise model.” (Janet Sparks, “Franchising Braces for 2020 California AB-5 Law Regarding Misclassification of Workers,” Forbes, 10/09/19)

• Most franchisors can usually pass elements A and C, but may be challenged to overcome B in Assembly Bill 5. “The attorneys explained that if the law applies, the problem with Assembly Bill 5’s ABC Test is while most franchisors can usually pass elements A and C, they may be challenged to overcome B. Element B states that “the person performs work that is outside the usual course of the hiring entity’s business.” At a basic level, independent contractors will be deemed employees if failing the AB-5 Test. Specific consequences depend upon the claims asserted and the context in which they arise. It could trigger unprompted government agency investigations, and claims brought by individuals to a government agency.” (Janet Sparks, “Franchising Braces for 2020 California AB-5 Law Regarding Misclassification of Workers,” Forbes, 10/09/19)

• Although AB5 includes some exemptions for specific occupations, franchising will not be included. “Although California’s AB-5 includes some exemptions for specific occupations and certain types of business arrangements, franchising will not be included.” (Janet Sparks, “Franchising Braces for 2020 California AB-5 Law Regarding Misclassification of Workers,” Forbes, 10/09/19)

• Franchising braces for 2020 California AB-5 law, according to a Forbes headline.

(Janet Sparks, “Franchising Braces for 2020 California AB-5 Law Regarding Misclassification of Workers,” Forbes, 10/09/19)

The California Trucking Association CEO said AB5 threatens the livelihood of more than 70,000 independent truckers:

• The California Trucking Association CEO said AB5 threatens the livelihood of more than 70,000 independent truckers. ““AB 5 threatens the livelihood of more than 70,000 independent truckers,” said CTA CEO Shawn Yadon. “The bill wrongfully restricts their ability to provide services as owner-operators and, therefore, runs afoul of federal law.”” (Steven Martinez, “Trucking Group Challenges California Independent Contractor Law,” HDT Trucking Info, 11/13/19)

• A judge granted a preliminary injunction on January 16, 2020 after initially granting a temporary restraining order on December 21, 2019. “On Dec. 31, Judge Roger Benitez granted a temporary restraining order prohibiting the state from enforcing AB5 against motor carriers pending the resolution of CTA’s motion for a preliminary injunction. He extended that restraining order after a Jan. 13 hearing that one attendee described as “spirited.” “In his Jan. 16 decision granting the preliminary injunction, Judge Benitez wrote: “There is little question that the state of California has encroached on Congress’ territory by eliminating motor carriers’ choice to use independent contractor drivers, a choice at the very heart of interstate trucking. In so doing, California disregards Congress’ intent to deregulate interstate trucking, instead adopting a law that produces the patchwork of state regulations Congress sought to prevent. With AB-5, California runs off the road and into the preemption ditch of the FAAAA.”” (Deborah Lockridge, “Judge: California Can’t Enforce AB5 Against Trucking,” HGT Trucking Info, 01/15/20)

According to a Fox Business headline, a judge halted AB5 that threatened 70,000 truckers’ jobs:

• A judge halted AB5, a law that threatened 70,000 truckers’ jobs, according to a Fox Business headline.

(Associated Press, “Judge halts California gig work law that threatened 70,000 truckers’ jobs,” Fox Business, 01/17/20)

• The federal judge indefinitely blocked the new California labor law from applying to more than 70,000 independent truckers. “A federal judge on Thursday indefinitely blocked a new California labor law from applying to more than 70,000 independent truckers, deciding that it is preempted by federal rules on interstate commerce.” (Associated Press, “Judge halts California gig work law that threatened 70,000 truckers’ jobs,” Fox Business, 01/17/20)

AB5 protests:

• California Assemblywoman Lorena Gonzales of San Diego shouted a profanity at AB5 protestors who were demonstrating against her controversial gig economy law. “California Assemblywoman Lorena Gonzales of San Diego is under fire after video captured the moment she shouted a profanity at AB5 protesters who were demonstrating against her controversial gig economy law.” (Lemor Abrams, “Assemblywoman Lorena Gonzales shouts profanity at AB5 protester,” CBS8, 02/25/20)

• Protestors have said AB5 was a piece of legislation that has ruined their lives. “Even though the event was for presidential candidate Elizabeth Warren, some in attendance were there to demonstrate against the assemblywoman’s now-infamous Assembly Bill 5 – a piece of legislation protesters said has ruined their lives. “How illiterate can you be to not see signs that say AB5 and then yell, f-Trump,” said Gloria Rivera.” (Lemor Abrams, “Assemblywoman Lorena Gonzales shouts profanity at AB5 protester,” CBS8, 02/25/20)

• Gloria Rivera was a translator and interpreter successfully operating as an independent contractor until AB5 began discouraging potential employers. “Rivera is a translator and interpreter successfully operating as an independent contractor until she said AB5 began discouraging potential employers.” (Lemor Abrams, “Assemblywoman Lorena Gonzales shouts profanity at AB5 protester,” CBS8, 02/25/20)

• One freelancer, Elizabeth Tobias, has said that she feels her “dignity has been violated” due to the new law. ““I have been a freelance artist for over 30 years, and I feel that my dignity has been violated. Suddenly, I am being punished,” said Elizabeth Tobias. Tobias has teamed up with thousands like her on the Facebook group, Freelancers Against AB 5.” (Lemor Abrams, “Assemblywoman Lorena Gonzales shouts profanity at AB5 protester,” CBS8, 02/25/20)