A new law is set to take effect in California on January 1 that could significantly shift the landscape for the gig economy and freelance workers across the state. The law, aimed at ride sharing drivers and food app delivery workers, will require the employer to reclassify them as employees and not contractors, giving the worker access to minimum wage and benefits such as overtime, workers compensation and health insurance.
Another area that's targeted in the legislation are freelance journalists. Vox Media, the parent company of sports site SB Nation, has already taken action and has laid off hundreds of freelancers before the law goes into effect.
Economics professors Cheryl Carleton and Mary Kelly recently published research on alternative work arrangements and job satisfaction.
"By making them regular employees of the company, workers that firms do hire would gain some benefits, and the government may gain some unemployment insurance payments," Carleton says about California's AB 5 legislation. "Such a law may be great for them. However, other workers will be worse off because they will be losing just what they wanted – the ability to work when and where they want. Some of these workers may already have needed benefits through a spouse or significant other or through another job. Perhaps they are retired and already have access to those benefits. Still, other workers may not be able to take a regular job with its rigid hours, so they will not be able to work at all."
Carleton also noted there is a larger issue about how benefits are provided in our economy.
"Benefits such as medical insurance, pensions and sick and disability leave are provided through one’s place of employment. To the extent that these other working arrangements are growing in popularity, the best approach may be for us to rethink how such benefits are offered. It may be that more should be offered by the government to citizens, which then allows them the ability to choose the job(s) they want that fill the needs they have."
To speak with Carleton or Kelly, click on their headshot, email email@example.com or call 610-519-5152.
Cheryl Carleton, PhD Assistant Professor of Economics; Director of the Villanova Women's Professional Network| Villanova School of Business
Cheryl Carleton, PhD, is an expert in labor economics and women in the workforce
Mary Kelly, PhD Associate Chair and Assistant Professor of Economics | Villanova School of Business
Mary Kelly, PhD, is an expert in economics, cable and the telecommunications industry