Assembly Bill nº5 of the State of California, known as AB5, is about to be signed. It establishes a legal framework for the gig economy, whereby employers are able to make a profit by not having to pay for stuff like social security, vacation time or insurance.
after another establishing their responsibilities to the people they employ on de facto full-time basis. All that the California AB5 aims to do is establish the difference between employees and the self-employed on three criteria. Somebody may be hired as a freelancer or an independent contractor when:
The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
If people cannot set their fees, have no control over how they do their work and are subject to control systems such as customer peer ratings, they are clearly not independent contractors, whatever the company that hires them says and the only thing that company is doing is to take advantage of a legal loophole to save on the costs of having to pay them vacations, social security, etc.
That said, there are situations where freelancers or independent contractors decide to offer their services to a company for a limited time and that do not provide their main source of income and that can legitimately be the basis of a service contract. But as we all know, this is not what happens in most cases and is certainly not the basis by which those high-profile companies mentioned above have been able to grow.
and will be forced to change their plans. The simple truth is that all businesses must be viable without detracting from the fundamental rights of those who participate in their value chain. If that makes your business unprofitable, if your business can only turn a profit by systematically infringing on the rights of others, then you don’t run a business, you’re not an entrepreneur: you’re something very different indeed.
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