A hotly contested California ballot initiative is shaping up to be a preview of what’s to come for national labor laws should the balance of power shift in Washington this November. After state lawmakers redefined what constitutes a freelancer or independent contractor versus an employee in 2019, it crushed the livelihood and dreams of millions of residents. Now Joe Biden wants to take that effort national, imposing radical infringements on worker freedom across the country.
To date, Uber, Lyft, Doordash, Postmates and Instacart have pledged at least $110 million to support the Protect App-Based Drivers and Services ballot initiative which would exempt their drivers from being forcibly reclassified as employees. The initiative stems from California’s controversial Assembly Bill 5 (AB 5), which changed the state’s worker classification tests to practically criminalize the usage of independent contractors across many professions.
Shortly after passage, more than two million freelancers and independent contractors received unexpected and disturbing news that they were facing limitations on their ability to generate earnings. Out-of-state media publications quickly fired teams of freelancers, owner-operator truck drivers were informed they could no longer operate in the state, and hundreds of thousands of other part-time and full-time independent contractors realized that the bill they thought only affected gig workers directly impacted their own ability to make money as well.
Prior to the new law, 61-year old cancer survivors like Monica Fontes found contract work as a phone interpreter during chemotherapy, to find personal motivation to get up and generate income. She says that the Biden-endorsed AB 5, “destroyed” her life. The founder of a California Christmas Caroling company estimates that 2020 may be the last year in business because of rising costs, depriving people of basic holiday joys because of inflexible employment mandates.
Biden has called the right of workers to engage in contracting with whomever they wish “unacceptable” and even endorsed the “Protecting the Right to Organize” (PRO) Act in Congress. This bill is a more radical version of California’s AB 5. It would limit the ability of every single business in America to use independent contractors and would overturn state Right-to-Work laws, which protect Americans from forced unionization as a condition of employment in 27 states.
Hardest hit by Biden’s war on workers would be small businesses, which often have lower margins and cash reserves. This makes them less able to survive periods of significant economic hardships, like those brought about by the Covid-19 shutdowns. Market volatility may explain why businesses with fewer than five employees utilize independent contractors more than any other sized business, with almost seven contractors working with them in a given year. Freelancers and contractors help small businesses meet their immediate business needs without saddling them with long-term costs of full-time employees.
The freelance and independent contractor workforce is comprised of at least 13.8 million workers, according to 2016 IRS data. In 2019, independent contractors made up 8.5% of the nation’s gross domestic product (GDP). Threatening the financial wellbeing of so many potential voters could spell disaster for Democrats nationally. In the key battleground state of Florida, there were over 1.2 million independent contractors in 2016. Two other swing states, Arizona and Nevada, are home to 430,000 independent contractors. Joe Biden’s promise to replicate the California model for forced worker classification is a huge vulnerability for his national candidacy.
Conversely, independent contractors have enjoyed significant protections by the Trump presidency. Both his Department of Labor (DOL) and National Labor Relations Board (NLRB) have safeguarded and codified flexible worker arrangements with businesses. In the first term of a Biden presidency, DOL and NLRB could potentially reverse the Trump-era protections without a single piece of new legislation. This would open the door for a forced unionization and dues coercion campaign by Big Labor against millions of people.
For the countless small businesses struggling to survive in the midst of ongoing Covid-19 shutdowns, a Biden presidency would not only burden them with higher labor costs, but also impose significant limitations on their ability to retain bridge labor during the recovery. Career politicians like Joe Biden and his Democrat allies in Congress refuse to embrace worker freedom because of the stranglehold of unions bosses on their party. This may spell political disaster for them in key states where they are ignoring a newly emerging constituency of independent entrepreneurs and freelancers who simply want to be left alone.
Pavle Djokic is the strategic initiatives associate at Americans for Tax Reform.