The Road to You-Know-Where in the Gig Economy

You know where they say the path littered with good intentions leads: No place you want to go.

That’s what appears to have happened with California’s new law, AB5, which was passed to force companies to re-classify gig economy workers as employees. Though it was aimed mainly at rideshare companies like Uber and Lyft, the law also has snared media companies.

Vox Media just announced that to comply with the law, it will fire hundreds of freelance writers and editors. About twenty of them stand good chances of being re-hired as part time or full time staff employees with benefits like health and unemployment insurance and minimum-wage levels.

It’s a fair bet that the intent of the law was not to take work away from anyone, but that’s the reality of it. Let’s hope that the other practical effect is to catalyze serious debate that leads to creating a better system for all workers. The question shouldn’t be whether someone is an employee or contractor. It is how to create an ecosystem that supports everyone in the way that helps them fill their potential, whether employees or freelancers, managers or line workers, full-time or part-time.

I fell into one of those good-intentions, bad-results traps early in my career. The year before I started graduate school, I was hired “part-time” at a newspaper that did not have a full-time slot available. By picking up extra freelance assignments, I was able to get my hours up to roughly full time. Word got back to the union, which was not happy that I was de facto full time without the benefits. So I was back down to part time, which did not leave me better off at all. Less pay and still no benefits. The paper did then announce a full-time opening, but they hired the other cub reporter who was *not* planning to go to grad school the coming fall.

Don’t get me wrong: the goal of getting more workers health and other benefits is a worthy one. Unfortunately, there are unintended consequences of forcing companies to sort workers into clear employee or contractor categories.

The binary employee-contractor distinction is not particularly helpful, particularly in the current economy in which 35 percent (and counting…) of US workers are freelancing. Many employers are cutting benefits to employees -for example increasing contributions for health care. Some have cut hours for part-time workers to avoid having to provide healthcare benefits.

With added pressure to treat contractors like employees, some companies are shying away from arrangements that might make work easier and more productive for their contract workers. At the same time, some have demanded more of their contractors, particularly when it comes to intellectual property, or delayed payments.

Though some freelancers simply can’t get full time work, many don’t want it even if they could get it. They like the independence to set their own hours, choose whom they work with, and diversify their sources of income. Laws to force companies to hire them interfere with this choice. They may duplicate benefits freelancers already have arranged through other sources -like health care through a spouse or their own plan.

At the same time, some freelancers end up working on their own not through choice but because their employer was cutting costs. They also end up on the short end of laws like AB5 that limit freelance work –and their ability to earn a living in a situation they didn’t ask for.

Are companies really benefiting from employees whose main motivation to stay at a job is to not lose their healthcare and benefits? Is the company or worker better off when human capital is squeezed -whether as a disgruntled employee or unhappy contractor? At the same time, what policies can ensure that companies do not use the gig economy to take more advantage of workers?

It’s time to re-think the distinctions between full-time and freelance workers and come up with a new system that gives workers flexibility and a safety net whether they are “working for the man” or are working for themselves. There need to be better ways to support both gig economy workers, employees, and the companies that employ them in whatever form.

Figuring out what that system looks like is way too much for a weekly musing. Btt there are some very smart people thinking about it, and you can be sure that I’ll share some of their ideas in this space in the future. Stay tuned -and in the meantime, I’d love to hear your thoughts and recommendations.

This article is part of my LinkedIn series, “Around My Mind” – a regular walk through the ideas, events, people, and places that kick my synapses into action, sparking sometimes surprising or counter-intuitive connections. 

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