This new year brought in a lot of changes for many people. In California, one of those changes is for any individual who freelances for a company that also has paid employees delivering that same service. (Also for the companies employing them.)
Referring to the new, Digiday says:
"The California Supreme Court ruled in April that a worker can only be hired as an independent contractor if they perform a job that is not part of a business’ “usual course.” For instance, an agency could employ a video producer on a freelance basis if it doesn’t have an in-house video team. If, however, an agency already has a video team, that additional person would have to be hired as an employee and granted all of the benefits that come with it."
You might think that "granted all the benefits" part is an improvement for the freelancers, but not really. For the most part, these companies that have any full-time employees fulfilling the same job as freelancers are paying the freelancers quite well while also giving them the freedom to work only when they want and only from where they want.
When I started off as a business consultant I had both employee and freelancer/independent contractor positions. I can tell you without a shadow of a doubt that the only ones I could last in were the IC ones. I just can't stand being an employee. And what I observed was that all the best consultants were freelancers. We were good enough to know we'd always have work when we wanted it, so didn't want anything to do with an employee situation that required all kinds of side nonsense.
More Security for the Least Secure Freelancers
Now for some freelancers this may be an improvement. Let's say a company has 10 employees and 20 freelancers that they use on various projects. With the new ruling, they might go up to 15 employees and no freelancers, and sometimes overwork those 15 people.
Well if those 5 freelancers who are willing to become employees are the ones who need more job security because they weren't getting called in to freelance regularly by enough employers, then for them it's an improvement. They now make more money because they work more hours consistently. They would have less flexibility, but 5 of the 20 freelancers would have more steady pay and benefits.
Presumably anyone who was at full employment before the change will not be willing to sacrifice freedom for the same pay, so they would decline to become an employee. The other 15 freelancers cut would need to contract for employers in some other state. That sometimes does work... well assuming the law goes by the state the business is in, not the state the contractor lives in while doing the work.
What Some Friends Think
A couple friends of mine commented on this new ruling as follows:
"I was a freelance writer for newspapers and magazines for years. That is another industry that relies on freelancers as well as employees. I have no idea what they are going to do. Even barber shops, catering companies and home care businesses have said they will suffer under this new law."
From another friend:
This happened in a friend's business. It was not an agency, but they had 2 ICs who were super happy being ICs, and so was the company, but because of the new law, they had to make them employees. Both quit.
What Do You Think?
Is this an improvement or does this hurt more than it helps?
You can tell from the title of this post what I think, but I'm really curious about your point of view. My friends are independent business folks, so they have a slanted view of things. I don't know the people who might prefer to be employees, so don't have any quotes from such.
In my experience, I think it makes things worse, but that's going off my previous situation. Maybe things will be different for others, and at this particular point in time. We are headed into recessionary years ahead, so maybe more people really need the benefit of employee status to protect them. At least they'll have unemployment insurance that way.
In the 2008 downturn I was a contractor and got no unemployment benefits when my company decided to leave CA. I wound up starting my own business doing the same work, and that's where I really made the money that has allowed me to now be retired relatively young. But not everyone would respond to being laid off with no unemployment income so successfully. For a lot of people, those 6-18 months of income make the difference between homelessness and staying afloat long enough for the economy to come back.
On balance, will more workers benefit from this change or lose because of it?
And what about the employers?
