Worried about your gig because of California’s AB5?
By: Nick Metzler
Tags: California, California Ab5, Musicians, Freelancers, Freelance

You, worried because of all those apocalyptic articles you just read. Hot mess.

You’re not alone.

There’s TONS of articles getting shared around online about the ‘burning dumpster fire’ that is California’s Assembly Bill 5 which was just signed into law on Jan 1st 2020. Here’s the legalese if you care.

Many freelancers are worried, with good reason, that their income is about to run dry- whether it was their side gig or their full time gig.

But I’m here to tell you what you can do about it… and it’s not about signing another damn petition that will move slower than a pregnancy.

Here’s the brief overview of the bill:

That’s a good pun. You should work on your block letters though.

It’s aimed at ride sharing companies like Uber, Lyft, and DoorDash who have taken advantage of the system and have hired all their workers as independent contractors so they can save money- basically Uber + Lyft don’t have to pay a bunch of taxes and benefits, saving them around 30% per worker. The Bill was created to help protect those workers because the amount of time they were working was comparable to a full time position, yet they weren’t getting the benefits that typically come along with it.

But the unintended consequence is that it attacked ALL companies who hired freelancers for core services.

That last bit about core services is important.

If a bar hires a band to play for a night for $250, the bar WOULD NOT need to hire the band as employees for that ‘one fucking gig’ as a music site so eloquently put it. Because the bar’s core services are selling alcohol, not playing music.

Sure, one could argue that a bar’s main focus is to provide environment and entertainment. But are the majority of its sales coming from ‘environment’? No. They’re coming from alcohol.

So rejoice musicians, you’re good to go there!

It’s a little less rosy for pro DJ’s though, who operate as a business, and who would pay small amounts of money to others to sample their songs. Technically speaking, this would be their core service because they’re making money from that and not much else. But if you’re small, the state will be mired with tons of court cases that are bigger and it would take a while to get to you. You’re probably good, but technically you’re still at risk. You could risk it and pay in cash under the table, but that would be illegal and I can’t recommend that. You’d be classified as part of the ‘informal economy’ which surprisingly is large. I recommend watching this crash course video on that if you’re interested in the erm… inner workings of it.

This same logic about ‘core services’ applies to ALL INDUSTRIES. So as long as you’re being hired for something outside of the business’s core services (ie, how it makes money or the main thing it does), you’re probably good.

OK let’s tackle journalists and freelance writers next.

Holy crap now I need to understand the law?

There’s an exception in the AB5 for freelance writers, saying that they can submit up to 35 articles or works per year per employer whose core services is writing or news publication. Obviously this is an issue for writers who get the bulk of their income from one or two sites/employers, which is quite a few writers.

The easiest thing to do for these businesses, especially online ones, would be to just not allow anyone from California to apply because these businesses can get writers from anywhere in the world. Dat’s not good for you.

There is some respite though. If you have a business, then you’re no longer an independent contractor and instead a business entity, ideally through an LLC or an S Corp. If you have that, you automatically have a leg up against your competition. The downside is that it costs $800 per year in Cali to have a business plus large expenses to file your corporate taxes.

Is this a good idea to file for a business then? Maybe not, unless you’re writing off a bunch of expenses every year.

Another option- start networking like crazy. If you’ve got a 35 limit cap, there’s nothing preventing you from going to other companies as well. That could be tougher than I just made it seem though.

This bill will probably hurt you writers more than the rest of the freelancers because most of your work goes to a business whose core services can be outsourced to writers around the world. Sorry I don’t have better news for you. The good news is this will probably be repealed or adapted in some way within 2020 so it’s a problem, but only for a short time. Might be a solid idea to start that business if you stand to lose more than $15–20k from this.

My name is Nick Metzler and I’m a strategist for freelancers. You can follow me on Instagram @metzlertactics

Hit me in my DMs or in the comments wherever you read this. I’d love to hear what you think about this.

Also, if you’re interested in a TOTALLY FREE webinar about how to:

Find more paying clients Turn small talk into business talk (easily and naturally) Ask for money for your services without being salesy or pushy

Then check out this link. It’s not a mindset webinar. It’s actionable steps. You can pause it at any time and you don’t need any of that credit card crap. Just me giving you some free info that worked wonders for me. If you want personalized one-on-one help to execute on your freelance goals, slide into my DMs on Instagram, happy to chat.