Kevin Kiley says a CA worker rights law means many Californians can no longer earn a living. Is he right?
Kevin Kiley had a somber warning to everyone when he spoke on the House floor recently.
Beware, the freshman Republican congressman said, of “a grave threat to American workers that is coming from Washington, D.C., right now.”
The threat, Kiley explained last week, is that Congress might nationalize the sort of three-year-old California law that reclassified many independent workers as employees — thus giving them the right to minimum wages, worker’s compensation and other benefits.
“With a single stroke of his pen, Governor Gavin Newsom rendered countless Californians, spanning hundreds of professions, unable to earn a living in our state,” said Kiley, who comes from Rocklin and represents California’s 3rd district.
There’s no independent data to support Kiley’s claim that California Assembly Bill 5 impoverished large segments of workers. However, experts say the law could have a significant, still unknown impact on state workers. It’s just difficult to say at this point because the law is too new to reliably evaluate.
Kiley is now in a position to keep a harsh spotlight on his view that the fallout from the California law threatens to have a dire impact on the right of freelancers and independent contractors to make a living. He has been named chairman of the House’s workplace protection subcommittee, the first stop for legislation that would impact worker rights and policy.
Labor vs. business
Labor interests have fought this battle before in California, and largely won.
“It’s a lot of noise,” said Lorena Gonzalez Fletcher, head of the California Labor Federation. “Kiley is so out of touch with working people.”
Chairing the House subcommittee, she said, “is going to make very little difference.”
The clash is a classic labor vs. business battle.
Labor advocates believe that freelancers, independent contractors and others without traditional, salaried workplaces should get the same rights as others. They also have the concern that too many people are misclassified as independent workers, and often lack such benefits as workers’ compensation, overtime, minimum wage and other benefits.
Business allies say such laws have a chilling effect on people who work on their own, including Uber and Lyft drivers, carpenters, roofers, artists, actors, musicians, freelance writers and others.
Complicating the debate is that there’s no apparent credible independent analysis of whether the California law has helped or hurt employment and employees.
“No major study has yet been undertaken to measure impacts. From my experience with employers and workers, the results so far are mixed,” said Michael Bernick, an employment attorney with Duane Morris LLP and former director of the California Employment Development Department,
“In some cases, employers have moved workers to employee status, while in other cases, they have decided to try to make do with fewer workers,” he said. “Workers themselves are divided, with a considerable segment of independent contractors preferring to remain in that status.”
The University of California, Berkeley Center for Labor Research and Education has studied the law extensively, but has no evidence yet about its impact.
“From our previous research, I believe the benefits of the law will far outweigh any negative effects,” said Ken Jacobs, the center’s chairman.
But, he said, at the moment, “I have nothing that adds up to any real evidence in terms of the law’s effect.”
California law vs. proposed federal changes
The law requires most independent workers — child care workers, truck drivers, janitors and others — to be classified as employees, not freelancers or independent contractors. That means they could be entitled to certain benefits from those who employ them and have protection against unfair labor practices.
Labor and workers rights advocates see the bill as a major win, and want to extend many of its provisions to the entire country.
“There are a lot of provisions that correct deficiencies,” said Rep. Bobby Scott, D-Va., top Democrat on the House Labor and Workforce Committee.
In Washington, Democratic leaders and labor have been pushing The Protecting the Right to Organize, or PRO, Act. It’s not identical to the California law, as PRO would empower unions to more easily organize. Those backing the bill argue that unions can provide more benefits and protection for workers.
The bill passed the House in 2021 as five Republicans joined 220 Democrats in voting aye. One Democrat and 205 Republicans voted no.
The bill went nowhere in the Senate. It needs 60 votes to move forward, and the Senate today has 49 Republicans.
Besides putting what they call burdensome requirements on employers and employees, what irks Kiley and those who agree with him is that the Biden administration is trying to make some changes without Congress.
It’s proposing a rule that would clarify who is or is not considered an employee. The general difference would be that workers running their own business are not employees, but the designation of employee would include those who are “dependent on finding work in the business of another.”
What can be learned from California?
Kiley has vowed to make his subcommittee “the center of these policy battles” over the California law and proposed federal rules and law. For him and his supporters, the rule and the PRO Act are means to a frightening end.
Tom Manzo, founder of the California Business and Industry Alliance, said he has seen the repercussions of reclassifying employees.
“You have people leaving the state. You have employers leaving the state. Employers outside the state are not interested in doing business outside California,” Manzo said.
“It’s clear that passage of the PRO Act would be devastating for our industry and the American economy,” the National Retail Federation states in a blogpost.
The act “attempts to re-create the workplace of yesteryear, denying many women flexibility and restricting entrepreneurship opportunities,” wrote Rachel Greszler, senior fellow at the Heritage Foundation, a conservative Washington research group.
Yet California’s unemployment rate in December, the latest figure available, was 4.1% as employers added 16,200 payroll jobs.
Thanks to the law, more people are being classified as employees, Jacobs said. “We’re seeing some advances being made,” he said.
“There is no question that improving the job quality — wages and stability — of lower wage jobs in California, strengthening the state’s middle class, is a main economic challenge in our state, as it has been for more than forty years,” said Bernick. “At this time, though, it’s not clear how much AB5 does this, especially in comparison to other approaches.”
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This story was originally published February 17, 2023 at 6:00 AM.
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