Reason magazine|August/September 2020
LINDA GREENSTEIN AND Joseph Lagana looked pained. The two New Jersey legislators knew their seats on the Labor Committee existed at the pleasure of the state Sen ate’s president, Steve Sweeney, who has a habit of removing his fellow Democrats from powerful positions if he doesn’t like their votes. Greenstein and Lagana had one job on December 5, 2019: back a bill that Sweeney had spon sored. And they did that job. But when the moment came to cast their votes and move the bill out of committee, each came close to apologizing.
The bill, which would have reclassified many independent contractors as traditional salaried employees, was promoted as a way to protect lowwage workers whose companies were cheating them out of salaries and benefits. But Greenstein and Lagana had just spent four hours listening to testimony from working mothers, senior citizens, African Americans, Hispanics, and suburban women—key parts of their party’s base—who said the legislation would instead destroy their chosen careers. The standingroomonly crowd that had come to testify against the bill included teachers, writers, bakers, lawyers, musicians, photographers, and truck drivers. It also included me: The bill threatened the stream of freelance writing and editing income I’d spent the past 17 years building.
“We heard an amazing—what I consider an amazing— amount of opposition,” Greenstein told the crowd, adding that the bill was the most confusing she has encountered in her two decades in the New Jersey Legislature. She ultimately voted yes, but she acknowledged for the public record that the legislation needed work: “I think that somebody used the term ‘unintended consequences,’ and it may be that that’s what’s going on here.”
State and federal lawmakers across America need to under stand what those bluestate Democrats learned that day—and the Democratic Party needs to amend its labor platform accordingly. The debate we were having in New Jersey shortly before COVID19 struck will be of critical importance for the entire American economy if we intend to climb out of the postpan demic economic wreckage.
The Democratic Party had been planning to roll out bills like this across the country, hoping to compel companies to hire more people as employees with benefits instead of as inde pendent contractors who get cashonly pay. The push started in California, where Gov. Gavin Newsom signed its version of the legislation—A.B. 5—into law in September 2019. Similar legislation was introduced around the same time in New Jersey and New York. On the federal level, language along the same lines was added to the proposed Protecting the Right to Organize (PRO) Act.
But the rollout didn’t go as planned. When A.B. 5 took effect in California on January 1, we didn’t see hundreds of companies convert independent contractors into employees. Instead, thou sands of independent contractors lost work they loved, some times ending up without any income at all. Truckers, writers, photographers, and others filed multiple lawsuits against the state, and more than 30 cleanup or repeal bills were introduced in Sacramento. Even A.B. 5’s original sponsor introduced a bill to try to fix some of the damage her law had done.
Spooked by the California results as well as by local outcry, New Jersey lawmakers ended up withholding their support, and the legislation stalled. In New York, which had the benefit of watching California and New Jersey go first, there was enough concern about pushback that Gov. Andrew Cuomo, instead of giving fullthroated support to that state’s version, tried to cre ate a task force to study the issue (it failed to materialize before the pandemic hit).
But at the federal level, Democrats are still clinging to the original playbook. Presumptive presidential nominee Joe Biden has endorsed the idea, both tweeting his support for California’s A.B. 5 and saying he’ll make a federal version the law of the land if he wins the White House. He says California has “paved the way” to a better future for workers. The idea also has the support of prominent members of Congress, including Sen. Elizabeth Warren (D–Mass.), Sen. Bernie Sanders (I–Vt.), and most Demo crats in the U.S. House of Representatives, which advanced the PRO Act in February.
They all say their stance is about protecting workers, even though California’s example has taught us that such regulations cripple huge swaths of the middle class, denying people the flexibility they want and the cash flow they need. And flexibility and cash flow will both be all the more important as COVID19 forces many of us to change the way we work.
THE LEGISLATION BEFORE the committee in New Jersey that day was built around something called the ABC Test. This three question tool, which regulators use to determine whether a per son is truly an independent contractor, requires that anyone doing work for a company be (A) free from the company’s control; (B) in a different line of business than the company; and (C) customarily engaged in the type of work, which is often interpreted as doing similar work for more than one company. If regulators feel that a person meets all three of the ABC prongs, then she can be classified as an independent contractor. If not, then a company that wants to hire her must treat her as an employee, or the state can slap the company with fines and penalties.
This ABC Test was created during the Great Depression in an effort to improve conditions for factory workers. It has been the standard in some states for decades, albeit in varying forms. Democrats often point to Massachusetts, which has had versions of the language on the books since the 1990s, as evidence that the ABC Test does not harm selfemployed work ers like the ones who have been protesting it in California, New Jersey, and New York.
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