California’s AB5 Leaves Women Business Owners Reeling

Sometimes I wonder if I should have a ‘?’ after Unintended Consequences, because my cynical side makes me think that this is not a bug, but a feature.

Aimee Benavides has built a thriving career as a translator and interpreter while homeschooling her nine-year-old daughter, who has autism, and 11-year-old son, who is heavily involved in STEM enrichment classes. What makes it all possible is the home-based business she started in 2010, after leaving a full-time job in the court system.

It isn’t easy to juggle it all. Sometimes she starts work at 5:30 am to get her work done—or brings her son to the school board meetings where she takes on evening projects. “The times I don’t take my son with me, they ask, ‘How is your son?’” she says.

Still, Benavides would not trade the flexibility of self-employment for a traditional job. Benavides’ business allows her and her husband, an IT professional, to afford the cost of living in Fresno, Calif., while still permitting them to manage their family responsibilities.

Benavides is one of a number of self-employed women in California who are speaking out in opposition to AB5, a union-backed law aimed at preventing misclassification of gig workers that took effect on January 1. The law presumes that every worker in the state—except those on a list of exempted industries, such as physicians, accountants, architects and engineers—is an employee.

Assemblywoman Lorena Gonzalez (D-San Diego), the bill’s sponsor, tweeted yesterday that under the law “if you are a true independent proprietor, you can still operate as one.”

She pointed to a test that allows sole proprietors, partnerships, LLCs, LLPs and corporations to operate legally in California if they meet 12 criteria—such as being free from the direction and control of the client, providing services directly to the client and not the client’s customers and being customarily engaged in the same type of work they are doing for the client—and pass another multi-point test, known as Borello.

However, many independent workers in California say AB5’s complexity has scared away their clients, who are afraid of getting hit with fines by the state if they misinterpret it. Governor Gavin Newsom’s proposed 2020 budget includes about $20 million for enforcement.