SACRAMENTO — President Joe Biden is nothing if not persistent with his ongoing plan to largely put independent contractors and freelancers out of business — part of his efforts to placate progressive union activists at the expense of ordinary Americans. Despite having populated his administration with Californians, the Biden government seems oddly oblivious to the disastrous effects of our state’s first-in-the-nation contracting ban (Assembly Bill 5).
It brings to mind Upton Sinclair’s 1935 quotation, “It is difficult to get a man to understand something when his salary depends on his not understanding it.” In this case, it’s difficult to get a president to understand something — even something as basic as the insanity of eliminating good jobs because the government doesn’t think they’re good enough — when his key financial political backing (from unions) depends on him remaining oblivious.
Fortunately, Senate Republicans are trying to remind him. U.S. Sen. Bill Cassidy of Louisiana has introduced the Congressional Review Act (CRA) resolution, which would overturn the administration’s attempt to bureaucratically impose a new worker-classification rule via the Department of Labor. That measure echoes AB 5’s use of an ABC Test that employers must use to determine whether it can use contractors rather than permanent employees.
Essentially, employers could only use contractors if it satisfies the entire alphabet soup: A) the worker must be free from the control of the employer; B) the worker must not be providing a core function of the business; and C) the worker must be “customarily” engaged in contracting work by, say, having set up an LLC. The California Supreme Court created this test out of thin air in its Dynamex decision that involved a delivery service that switched its hourly employees to contractors. AB 5 codified the decision.
“Independent contractors, or freelancers, make their own hours to fit their schedule and decide where and how they want to work,” Cassidy noted in a January column for Fox News. “Incidentally, they are shielded from forced or coerced unionization that would strip that flexibility away. This has made eliminating freelancing a top priority for large labor unions who want more workers paying forced union dues.” That likely explains why Biden is ignoring the California experience, even though it threatens the livelihoods of 27 million gig workers.
The Biden rule is a little different from AB 5’s test, explained my R Street Institute colleague C. Jarrett Dieterle, a senior fellow in competition policy: “For instance, the new rule includes analyzing whether ‘the work performed’ by a worker ‘is an integral part of the potential employer’s business.’ … (I)f the work is deemed an integral part of the business, that ‘weighs in favor of the worker being an employee.’” But the end goal is basically the same.
I’ve written extensively about that AB 5 disaster for The American Spectator. As I explained last August:
You’re probably not shocked to learn that, instead of making contractors permanent employees and providing them with fringe benefits, employers simply stopped using independent workers. Even one media company (Vox Media) that had published articles supporting the bill cut hundreds of California-based freelancers. AB 5 exacerbated the state’s supply chain and port woes, as it restricted the owner-operator trucker model.
The whole thing was a mess. For a time, the ban shut down musical gigs and community theaters and forced freelance columnists — including former Speaker Willie Brown, who had written a column for the San Francisco Chronicle — to stop working after they reached an arbitrary limit. State leaders forced us to stay at home yet doubled down on implementing a law that eliminated work-from-home jobs and limited food and other deliveries to people stuck at home.
The California Legislature ultimately exempted more than 100 industries from the requirements. Voters overturned via Proposition 22 the limits on ride-share drivers. Even many Democrats wish the whole fracas would go away, but the law continues to impede truck drivers because it forbids the use of owner-operators. A lawsuit on that matter continues, but AB 5’s implementation sparked contentious protests at the Port of Oakland.
Nonetheless, the feds implemented the Department of Labor rule beginning in January. As I noted in my testimony to the department:
[The] current rulemaking is more limited than AB 5, but the supporters of the rule hope that its approval will spread throughout the federal government — and ultimately will accomplish through regulatory fiat what most state legislatures are rightly unwilling to do on their own.
The Senate has yet to confirm Julie Su as labor secretary, in part because of her efforts as California’s top labor official during the AB 5 process (and during an Employment Development Department scandal that misdirected billions of unemployment dollars). She continues as acting secretary. “I’m going to do this job for as long as the president wants me to do it and as long as the American people need somebody who’s going to fight for working people,” she told CBS News.
So, obviously, the administration knows exactly what it’s doing. And what it’s doing is the union movement’s agenda, even if it means implementing such major intrusions in the economy without congressional approval. The Senate CRA has 31 co-sponsors and, as Cassidy recently noted, is backed by 78 business and market-oriented organizations including my employer, the R Street Institute.
This labor-related DOL edict should get additional attention now that the U.S. Supreme Court is considering the legal doctrine known as Chevron deference. That refers to a 1984 high-court decision in Chevron U.S.A. v. Natural Resources Defense Council that defers to administrative agencies in the interpretation of agency action. It’s one of the worst decisions in the court’s history of bad decisions, in that it incentivizes executive overreach.
Biden’s efforts to impose a de facto contracting ban via a regulatory agency is incredible overreach — and in service to a job-killing, freedom-quashing agenda that benefits no one except for unions that want federal help in recruiting members and halting competition. Here’s hoping Congress and the Supreme Court exert their authority to protect other American gig workers from going through what workers experienced in California.
Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.
