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Correct me if I am wrong but freelancing sites like Upwork, Fiverr, Toptal, and YC's own Gigster won't be affected. The sites only setup contractors with busin

Correct me if I am wrong but freelancing sites like Upwork, Fiverr, Toptal, and YC's own Gigster won't be affected. The sites only setup contractors with businesses on a project by project basis and meant to be temporary from the outset. This is meant to target companies that provide the services directly, hire people to work non-stop for them and in the same field/line of work or industry as the business. Also many freelancers already have LLCs or business so this is business level contracting corp to corp on these sites. Places like Uber/Lyft might also be able to argue they are a matchup service between drivers and passengers/travelers but it will probably change some payment aspects. Companies that provide food, cleaning, or services like janitorial and others that cheap out by making workers contractors are probably the biggest offenders of having people employed for years, providing that service, and cheaping out on contractor labor instead of employment. There will probably be lots of loopholes found as well over time, primarily when becoming a business rather than an individual working for these types of businesses.

jameslk 7y ago
> Correct me if I am wrong but freelancing sites like Upwork, Fiverr, Toptal, and YC's own Gigster won't be affected. The sites only setup contractors with businesses on a project by project basis and meant to be temporary from the outset. This is incorrect. These companies do not simply set up contracts between companies and walk away and they aren't necessarily project based (especially for Upwork and Toptal). Nor are the contracts necessarily short term (some go on for years). These companies collect payments on behalf of the freelancers that work underneath them and some take an undisclosed percentage or added cut on top. I'm a member of Upwork, Toptal and Gigster, so I'm basing this off my actual experience. Reviewing AB5's ABC test, I see nothing that prevents these companies from failing at least one if not all the provisions (you need to be compliant in all 3): 1. the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact 2. the worker performs work that is outside the usual course of the hiring entity's business 3. the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity > Also many freelancers already have LLCs or business so this is business level contracting corp to corp on these sites. This is not necessarily the case. I definitely didn't have an LLC when I started freelancing. It costs $800/year in California and doesn't offer much benefit to a freelancer. Edit: It looks like in the case of Upwork, they're using the "professional services" exemption from AB5 and offering to W2 workers like a staffing agency: > And if you look at the text of the law there's various mentions about -- around professional services being excluded. So that's one component of it. The second component of it is the fact that we actually also are payrolling services. So we would -- we call it freelancing but some of the work in Upwork is under a 1099 some of the work on Upwork is done through a W-2. Through our product offering we have called Upwork Payroll. https://www.fool.com/earnings/call-transcripts/2019/11/07/upwork-inc-upwk-q3-2019-earnings-call-transcript.aspx https://www.fool.com/earnings/call-transcripts/2019/11/07/up...
- drawkbox 7y ago
  Looks like this really won't affect software freelancing for engineering and creative services. AB5 wouldn't affect services like these under the "Professionals" or "Professional Services" label. [1][2] Software contracting is largely excluded especially freelance. Even if you needed to get an LLC you could get an out of state LLC for cheaper LLC if $800 in CA is too much, usually around $400-$800 when all setup fees are put in. AB5 is largely a moot point for software/creative services beyond writing more than 35 articles a year. Under the ABC test, a worker is presumed to be an employee unless the company proves that the worker:[2] (A) Is free from the control and direction of the company in performing work, both practically and in the contractual agreement between the parties; and (B) Performs work that is outside the usual course of the company’s business; and (C) Is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company. If there was ever any issues with (C) which would be the only possible conflict, software/product/creative/engineers can get LLCs to to corp to corp contracting. AB5 exemptions: - Doctors (physicians, surgeons, dentists, podiatrists, veterinarians, psychologists) - Professionals (lawyers, architects, engineers) - Professional services (marketing, human resources administrator, travel agents, graphic designers, grant writers, fine artist) - Financial services (accountants, securities broker-dealers, investment advisors) - Insurance brokers - Real estate agents - Direct sales (if compensation is based on actual sales and not wholesale purchases or referrals) - Builders and contractors - Freelance writers and photographers (if contributes no more than 35 submissions to an outlet in a year) - Hair stylists and barbers (if licensed and if can set own rates and schedule) - Estheticians, electrologists, and manicurists (if licensed) - Tutors (that teach their own curriculum, and that are not public school tutors) - Commercial fishermen - AAA-affiliated tow truck drivers AB5 covers: - Health care professionals (occupational therapists, speech therapists, optometrists, nurse practitioners, physician assistants, radiation therapists, licensed professional clinical counselors, marriage and family therapists, licensed clinical social workers, respiratory therapists, audiologists) - Rideshare, delivery service workers, and other gig economy workers - Truck drivers - Janitors & housekeepers - Health aides - Performers and other entertainment professionals - Land surveyors, landscape architects, and geologists - Campaign workers - Language interpreters - Exotic dancers - Rabbis and other clergy [1] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5 https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm... [2] https://www.dwt.com/blogs/employment-labor-and-benefits/2019/09/california-ab5-employment-law https://www.dwt.com/blogs/employment-labor-and-benefits/2019...
unlinked_dll 7y ago
Barring the exemptions on certain industries/salary thresholds, I don't see how what these businesses do is fundamentally different than say, uber connecting you to a driver. They're distributed consultant firms, I could see an argument for Upwork et al needing to classify their freelancers as employees and cover benefits if they fit the criteria.
- username90 7y ago
  Main difference is that you negotiate contracts at Upwork, you don't do that in Uber. I still think that Uber should't count as employees, but that is the argument I see the proponents give.

jameslk 7y ago

> Correct me if I am wrong but freelancing sites like Upwork, Fiverr, Toptal, and YC's own Gigster won't be affected. The sites only setup contractors with businesses on a project by project basis and meant to be temporary from the outset. This is incorrect. These companies do not simply set up contracts between companies and walk away and they aren't necessarily project based (especially for Upwork and Toptal). Nor are the contracts necessarily short term (some go on for years). These companies collect payments on behalf of the freelancers that work underneath them and some take an undisclosed percentage or added cut on top. I'm a member of Upwork, Toptal and Gigster, so I'm basing this off my actual experience. Reviewing AB5's ABC test, I see nothing that prevents these companies from failing at least one if not all the provisions (you need to be compliant in all 3): 1. the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact 2. the worker performs work that is outside the usual course of the hiring entity's business 3. the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity > Also many freelancers already have LLCs or business so this is business level contracting corp to corp on these sites. This is not necessarily the case. I definitely didn't have an LLC when I started freelancing. It costs $800/year in California and doesn't offer much benefit to a freelancer. Edit: It looks like in the case of Upwork, they're using the "professional services" exemption from AB5 and offering to W2 workers like a staffing agency: > And if you look at the text of the law there's various mentions about -- around professional services being excluded. So that's one component of it. The second component of it is the fact that we actually also are payrolling services. So we would -- we call it freelancing but some of the work in Upwork is under a 1099 some of the work on Upwork is done through a W-2. Through our product offering we have called Upwork Payroll. https://www.fool.com/earnings/call-transcripts/2019/11/07/upwork-inc-upwk-q3-2019-earnings-call-transcript.aspx https://www.fool.com/earnings/call-transcripts/2019/11/07/up...

drawkbox 7y ago
Looks like this really won't affect software freelancing for engineering and creative services. AB5 wouldn't affect services like these under the "Professionals" or "Professional Services" label. [1][2] Software contracting is largely excluded especially freelance. Even if you needed to get an LLC you could get an out of state LLC for cheaper LLC if $800 in CA is too much, usually around $400-$800 when all setup fees are put in. AB5 is largely a moot point for software/creative services beyond writing more than 35 articles a year. Under the ABC test, a worker is presumed to be an employee unless the company proves that the worker:[2] (A) Is free from the control and direction of the company in performing work, both practically and in the contractual agreement between the parties; and (B) Performs work that is outside the usual course of the company’s business; and (C) Is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company. If there was ever any issues with (C) which would be the only possible conflict, software/product/creative/engineers can get LLCs to to corp to corp contracting. AB5 exemptions: - Doctors (physicians, surgeons, dentists, podiatrists, veterinarians, psychologists) - Professionals (lawyers, architects, engineers) - Professional services (marketing, human resources administrator, travel agents, graphic designers, grant writers, fine artist) - Financial services (accountants, securities broker-dealers, investment advisors) - Insurance brokers - Real estate agents - Direct sales (if compensation is based on actual sales and not wholesale purchases or referrals) - Builders and contractors - Freelance writers and photographers (if contributes no more than 35 submissions to an outlet in a year) - Hair stylists and barbers (if licensed and if can set own rates and schedule) - Estheticians, electrologists, and manicurists (if licensed) - Tutors (that teach their own curriculum, and that are not public school tutors) - Commercial fishermen - AAA-affiliated tow truck drivers AB5 covers: - Health care professionals (occupational therapists, speech therapists, optometrists, nurse practitioners, physician assistants, radiation therapists, licensed professional clinical counselors, marriage and family therapists, licensed clinical social workers, respiratory therapists, audiologists) - Rideshare, delivery service workers, and other gig economy workers - Truck drivers - Janitors & housekeepers - Health aides - Performers and other entertainment professionals - Land surveyors, landscape architects, and geologists - Campaign workers - Language interpreters - Exotic dancers - Rabbis and other clergy [1] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5 https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm... [2] https://www.dwt.com/blogs/employment-labor-and-benefits/2019/09/california-ab5-employment-law https://www.dwt.com/blogs/employment-labor-and-benefits/2019...

unlinked_dll 7y ago

Barring the exemptions on certain industries/salary thresholds, I don't see how what these businesses do is fundamentally different than say, uber connecting you to a driver. They're distributed consultant firms, I could see an argument for Upwork et al needing to classify their freelancers as employees and cover benefits if they fit the criteria.

username90 7y ago
Main difference is that you negotiate contracts at Upwork, you don't do that in Uber. I still think that Uber should't count as employees, but that is the argument I see the proponents give.