California's AB5 put freelancers out of work, and voters pushed back

Only a legislature could pass a law to protect freelance writers from being treated as freelancers by capping how many articles a freelance writer was allowed to write. I wish I were making that up. The original text of California's Assembly Bill 5 let a freelance journalist keep working as an independent contractor only up to thirty-five submissions a year for any one client. Submission number thirty-six, and you were, in the eyes of the state, an employee, and your client had a very good reason to stop calling.

That detail is the whole law in a nutshell: a sincere attempt to help workers, written by people who had never tried to make a living the way those workers do. Let me tell the story in order, because the order is where the comedy and the tragedy both live.

The problem the law claimed to solve

Start with the real question, which is not silly. Who counts as an employee? The answer matters. An employee gets a minimum wage, overtime, unemployment insurance, workers' compensation and the protection of anti-discrimination laws, and the employer pays payroll taxes and carries the paperwork. An independent contractor gets none of that and none of those costs. If an employer can label a worker a contractor to avoid the costs, the temptation to misclassify is real, and a fair-minded conservative should say so. Some companies did abuse the label, and enforcement against genuine misclassification is a legitimate job of government.

The difficulty is that the line between employee and contractor is genuinely fuzzy, and the way a law draws it decides who gets work. For decades courts applied multi-factor tests that looked at how much control the hiring party had over the work. That is a test with many dimensions, and it is slow, but it sorts people who work in different ways.

Dynamex and the ABC test

In April 2018 the California Supreme Court changed the test. The case was Dynamex Operations West, Inc. v. Superior Court, which involved delivery drivers who said that their company had wrongly classified them as contractors. The court held that for purposes of the state's wage orders, a worker is presumed to be an employee unless the hiring entity proves three things, the so-called ABC test.

• A. The worker is free from the hiring entity's control and direction in doing the work, both by contract and in fact.
• B. The work is outside the usual course of the hiring entity's business.
• C. The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.

All three must be satisfied. Fail one and the worker is an employee. Prong B is the killer. A freelance photographer hired by a magazine does work in the usual course of a magazine's business. A musician hired by a venue plays music in the usual course of the venue's business. A driver hired to drive for a delivery company is doing the delivery company's work. Prong B means that the more central the freelancer's work is to the client's business, the less likely the freelancer is to qualify, which is precisely the opposite of how most freelance work operates.

Assembly Bill 5

The Legislature then wrote the Dynamex test into statute. Assembly Bill 5, authored by Assemblywoman Lorena Gonzalez, passed in the summer of 2019 and was signed by Governor Gavin Newsom on September 18, 2019. It took effect on January 1, 2020. It applied the ABC test across the Labor Code, the unemployment insurance code and the wage orders, and it set out a list of exemptions for particular professions, among them doctors, lawyers, accountants, real estate agents and a few others, and it left the rest of the economy to the three-prong test.

Look at who was on the exemption list, and ask how they got there. Professions with the lobbying muscle to be heard in Sacramento before the vote got a carve-out. Professions that did not, because they were scattered, unorganized and not on anyone's donor list, found out about their status when the bill became law. That is how it so often goes. The people with the least capital to adapt, and the least pull with the capitol, are the ones who pay.

The freelancers who lost work

What happened next was not a surprise to anyone who had talked to a freelancer, and it was a shock to the authors.

Writers and editors learned that clients, wary of the legal risk, would stop using California-based freelancers or would hire them only through other arrangements. Translators, interpreters, photographers, videographers, court reporters and graphic designers reported lost contracts and canceled bookings. Musicians learned that the venues and promoters who had booked them as independent acts were suddenly unsure of their status. Truckers who owned their own rigs faced a regime that treated them as employees of the carriers they hauled for. And the app-based drivers, the group whose work had inspired the whole thing, found that the same law that was supposed to make them employees came with the threat that the companies would restructure or leave.

I do not want to invent a precise count of jobs lost, because I cannot verify one and I will not. What I can say, with confidence, is that the complaints were loud, widespread and came from people who had no particular political agenda. Picture a freelance translator in San Diego who works for five agencies. Under the ABC test, each of those agencies had to ask whether her work was outside the usual course of its business, and the honest answer was no, because translation is what they sell. Five clients now had every reason to find someone outside California. That picture is hypothetical, but it is the mechanism.

And here is where the coverage was, frankly, a hoot. In the early months, a lot of the reporting treated the whole thing as a labor-versus-Silicon Valley contest and spent its energy on the rideshare companies. The people whose livelihoods were being rewritten in a few lines of code, the ones who did not work for a tech giant and had no lobbyist, got a paragraph at the end of the story.

The cleanup: AB 2257

Legislators discovered what they had done. In the months after the bill took effect, they issued a series of carve-outs. Then, in 2020, the Legislature passed Assembly Bill 2257, which rewrote and expanded the exemptions. The new list was long. It covered, among others, freelance writers, editors, photographers, videographers, illustrators and other creative workers under certain conditions, many musicians, various professional services, and others.

Pause on this. A law was passed, found to hurt a long list of people the authors had not meant to hurt, and was then fixed by the addition of an enormous number of exceptions. Every exemption is an admission. When a rule has to be suspended for photographers, musicians, translators, editors, consultants and so on, the fair conclusion is not that the exemptions were wise. It is that the rule was unsound for the economy that it was written to govern. A good law needs few exemptions. A law that needs a dozen pages of them is telling you something.

Proposition 22

The app-based drivers were not exempted by the Legislature. They went to the voters. Rideshare and delivery companies put an initiative on the November 2020 ballot, Proposition 22, which would classify app-based drivers as independent contractors while giving them certain protections, among them a guaranteed minimum earnings level tied to engaged time, a health care stipend for drivers who worked enough hours, insurance for on-the-job injuries and protections against discrimination and harassment.

Opponents, including labor unions, argued that this was a way for companies to buy their way out of the law, and the companies spent very large sums on the campaign. The money on both sides was heavy. But on November 3, 2020, California voters passed Proposition 22 by a wide margin, and the margin held up across a state that went solidly for the other party at the top of the ticket. A large share of voters who chose one party for president chose a ballot measure that said app drivers could stay independent.

That is worth underlining. In a state that is as far from conservative as any in the Union, in the same election that delivered a clear presidential result for the left, voters looked at a labor-protection law and said no thanks, at least when it applied to a flexible job that many people prefer. It is evidence that independence is not a talking point for the right. It is something that people who do the work often want.

Later, the legal fight went on. A superior court judge in Alameda County ruled in 2021 that the measure was unconstitutional, a lower appellate court reversed that ruling in 2023, and the California Supreme Court upheld the measure in 2024. I would ask the reader to verify the later details in the state's court records, but the thrust is that Proposition 22 survived.

Why independence matters: the numbered argument

Let me set out the reasoning, since it is the part that applies to every state and to Washington.

1. People choose flexibility. A parent who drives in the hours between school drop-off and pickup, a nurse who does shifts for several hospitals, a musician with a day job and a weekend gig, a retiree who consults: these people want control over their own time. The ABC test treats independence as a loophole and not as a goal.

1. A test that asks whether the work is central to the client's business punishes the people who are the most valuable to the client. Prong B turns the logic of specialization upside down. The better the freelancer is at what the client sells, the harder it is to qualify.

1. The rule's costs fall on the people it is meant to help. Clients who cannot take the legal risk stop hiring. The worker goes from independent income to no income.

1. A thicket of exemptions is not a policy. When a law needs a dozen pages of exceptions, the public is governed by the lobbying power of professions. That is a recipe for favoritism, not fairness.

1. Voters understood it. Proposition 22 showed that the people closest to the work, the drivers, did not want to be told they were employees.

The federal version

Now the part that should concern the rest of us. California's experiment did not stay in California. Federal proposals have sought to write the ABC test into national labor law. The best known is the Protecting the Right to Organize Act, the PRO Act, which would apply an ABC-style test under the National Labor Relations Act. It passed the House in 2020 and again in March 2021, and it has not become law. The Labor Department has also issued independent-contractor rules under different Presidents, swinging between a looser and a stricter test, which is its own kind of instability for the people who work this way.

The lesson of California is the lesson of every large rule: test it on a small scale first, and be skeptical of anyone who wants to apply it to the whole country at once. That is the argument of Federalism Lets Fifty States Experiment, and the Constitution Planned It. California tried it, and the results, from lost contracts to a mountain of exemptions to the ballot box, are in the public record for every other state to read.

The Founding angle

Madison, in his 1792 essay on property, wrote that a man has a property in his faculties and in the free use of them. That is not the usual way we think of a labor law, but it is the right place to start. A person's ability to offer his work on his own terms, to decide when, for whom and at what price, is among the oldest forms of property there is. A law that tells a freelance writer that she may not offer thirty-six articles to one client without being reclassified is a law that interferes with that property. The Declaration speaks of the pursuit of happiness, and for many Americans the pursuit of happiness includes the right to be your own boss.

If you want a companion piece on how government rules shape who can work at all, read arizona's universal license recognition and the case for copying it, and on the minimum-wage side of the same question, the minimum wage's 1938 birth and the workers it was meant to shut out. On the way rules favor large players, see big companies love the regulations their small rivals cannot afford.

The case in brief

1. The California Supreme Court's 2018 Dynamex decision adopted the ABC test, and Assembly Bill 5, signed in September 2019, wrote it into statute.
2. Prong B, which asks whether the work is outside the usual course of the client's business, made many freelancers, from writers to musicians to translators, hard to classify as independent.
3. The law cost freelancers contracts, and the Legislature responded with AB 2257 in 2020 and a long list of exemptions, an admission that the rule did not fit the economy.
4. California voters passed Proposition 22 in November 2020, exempting app-based drivers, in an election where the same electorate leaned the other way on most partisan questions.
5. Federal proposals to copy the ABC test deserve the same skepticism, since independence is something many workers choose, not something forced on them.

What you can do: find out which test your own state uses to classify workers by searching your state labor department's website, and ask your state legislators before they consider copying the ABC test.