California Assembly Bill 5 (AB5) went into effect on January 1, 2020 and its impact can be felt beyond state boundary lines. The bill was intended to protect gig-economy workers from being misclassified, but has made it difficult for those who choose to work independently. In addition, there is now a federal bill, H.R. 2474 (PROAct) that contains similar language and will make it more difficult for people to work independently.
These bills lack a fundamental understanding of the nuances of independent work and are causing many organizations to cut their external workforce. The most recent episode of “That Solo Life” podcast tackled this issue with workforce expert, Gene Zaino, Founder and Executive Chairman of MBO Partners.
MBO Partners, long a proponent of the independent workforce has proposed modernizing the independent workforce with a “Certified Self Employed Designation.” This designation would allow individuals to declare their choice to be independent rather than being forced into an employee designation because of bills like AB5 and the PROAct. The designation acknowledges what Solo PR Pros have known for decades, we choose this way to work because we value the freedom it provides.
In the wake of these bills, there are steps that you can take to protect your freedoms.
- Operate like a business. Most Solo PR Pros are already operating as a small business or microagency, but it is important that your clients understand that distinction. Talk to your legal and financial professionals to structure the business entity that works best for you. There are many ways to compliantly work as an independent including working through companies like MBO Partners.
- Demonstrate that you are a business by marketing and being open to serve clients. All of the legislation shares the ABC test of independence that includes the following criteria:
- You are free from the client’s control or direction in performing the work.
- The work takes place outside the usual course of the business of the company and off the site of the business.
- Customarily, you are engaged in an independent trade, occupation, profession, or business.
Raise your voice. As Solo business owners, we should advocate for our freedoms. Call and write your elected officials. There are also groups that have formed, such as Faces of AB5 and Freelancers Against AB5 that you can follow (in addition to Solo PR PRO) to stay on top of information.
Listen to the podcast below or on your favorite podcast app.
We want to hear from you. Has AB5 impacted your business? Share in the comments below!