Regulators created the 1099 / W-2 distinction for a reason. There are probably good reasons to adjust the rules to take into account the so called gig economy, but making 1099 nearly illegal is not a net regulatory improvement when considering all the collateral damage.
One option that seems very reasonable to me would be to introduce a third option: Employee (W-2), Independent Contractor (1099), Dependent Contractor (new gig economy group).
> One option that seems very reasonable to me would be to introduce a third option: ... Dependent Contractor (new gig economy group).
Yeah that's my preferred option too if we must keep the system, but it has a lot of the same problems.
Small orgs don't have the resources to hire lawyers to figure out if they can do 1099 or "new thing", and so it will still have the same chilling effect on 1099 work.
There should be a chilling effect on some types of employment arrangements where avoidance of worker protections and ancillary compensation was occurring.
Sure but don't do it by mandating what kind of contracts people can enter into. Do it by supporting social services so that they don't have to accept bad contracts.
I think we are destined to agree to disagree. Evidence has shown that people will be economically coerced into contracts, or are not educated enough to understand the consequences of the contract (gig drivers not knowing how little they're making) and the social services currently do not exist to protect them, nor are they likely to be spun up.
Sure, journalists get the short end of the stick, as well as gig workers who don't need the income and just want to do it part time. Edge cases are unfortunate.
Creating a robust social safety net and well-paying jobs is substantially more complex (or, in actuality, impossible in this country) than just banning the employee-as-contractor fraud.
This is exactly the attitude that creates large unmaintainable codebases that are layers of hacks upon hacks. There is an alternative and that is to hire people to do the job that are competent in wrangling complexity and refactoring the system in question.
No, that's not the case at all. You need buy in from interested parties, which you don't have in politics, and if you have a large unmaintainable codebase, you probably don't have from the people in charge.
So everyone should suffer until those exist because businesses are permitted to take advantage of them?
I'm spending low six figures annually on political donations to those who support universal healthcare. I still support shims like this until it gets here. Sorry I'm not fixing it fast enough for you.
AB 5 has everyone suffering. Consider this for a moment, Silicon Valley: the Tiger Teams you contract to pull your fat out of the fire when your infrastructure starts melting down, well you can’t hire them under AB 5 if they are California-based. Persons (which includes Corporations) cannot be independently contracted to produce your main line of business. And when your business is Tech and so it theirs...
> So everyone should suffer until those exist because businesses are permitted to take advantage of them?
That's exactly the point. Everyone wasn't suffering and in dire need of rescue by the state of California. Now, we have a law that hasn't helped the people it was supposed to help and has put quite a few legitimate businesses out of work. Good intentions or not, AB 5 is worse than the old status quo.
Why? not everyone needs an overlarge and authoritarian government baby sitting them.
We became great as a nation without having to rely on a nanny-state to "protect" those poor poor people who are "obviously" unable to do it themselves...
True! And in 1875, do you know what happened if you got hurt on the job? They left you for dead because there was no consequence in doing that. Maybe if they were nice they would drag you back to town to see the doctor first.
But then you couldn't work anymore, and so you died or begged for charity.
The nation was built on the fact that if you became unable to work, or were never able to work at all, you were discarded by society.
I don't want to live in a society that discards people because they can't work.
Workers should be able to choose for themselves. There's a non-trivial amount of rideshare drivers who already have full-time commitments (jobs, school, etc) and want extra income.
They are not looking for another job and just want to maximize flexible revenue.
How about the government provides health insurance and other social service benefits (like employment), then it wouldn't be part of the cost those businesses try to get away from paying?
There are also thousands of people every year who do gig jobs and then get significantly hurt financially when they fall through a job benefit crack (health insurance etc) when they lose a job.
Sure, healthcare separated from employment would be a fantastic development. Doesn't change my point that people should be able to make their own choices.
> Small orgs don't have the resources to hire lawyers to figure out if they can do 1099 or "new thing"
Well there you have it. If small orgs don’t generally have the legal capability to correctly classify employees among three whole choices, then many probably also can’t choose well between two. AB5 helped them make the correct choice, and good thing, given what you’ve said here, but maybe even two choices is too many. Maybe there should be no 1099.
Repeated below but this comment seems more pertinent:
Can the California state legislature create a new federal class of worker?
I keep seeing this in threads, but I don't understand the rationale. The United States Federal Government recognizes W-2 and 1099 filings, the State of California cannot invent a new Federal filing status or amend the United States Code, correct?
No but they can create a new state classification and then make the employer do a 1099 for that person federally but treat them differently under state law.
I disagree. The federal distinction is mainly for federal taxes. The state is not just concerned with taxes, it's also concerned with other labor laws, so it may need to distinguish differently.
I mean, you would need both right? You want consistent tax treatment the whole way through and obviously state worker protections would be the main thing. What am I missing?
I don't see why that's helpful. W2 employees would be treated the same as now. 1099 employees would be treated the same from a federal standpoint, but separated into two groups from a state standpoint.
I suspect dependent contractor and hourly worker would effectively merge. Both would get benefits if they work enough hours. The difference would be whether the boss picks the work hours or you do.
The big issues would be when worker starts and ends, self direction in terms of how they do the job (and associated liability), worker's comp, unemployment insurance, and tools / vehicles (I.e. should Uber be required to pay ~50 cents per mile to it's drivers. W-2 says yes, 1099 says no).
If someone works for two companies such as both Lyft and Uber are they still a dependent contractor? If you have more than one source of income that seems to be mutually exclusive with being dependent, no?
What's the criteria for determining whether someone is a dependent contractor?
I'm not against the idea, but it's important to have clear unambiguous criteria.
Probably as the government don't like the little guy or gal actually working as a real self employed contractor - see IR35 in the UK (oh but self employed layers that's fine )
I see Independent Employee as code for hourly worker, and I see hourly worker and dependent contractors being basically the same, other than who chooses what hours one works.
One option that seems very reasonable to me would be to introduce a third option: Employee (W-2), Independent Contractor (1099), Dependent Contractor (new gig economy group).