Independent Contractor Price Setting Bill Stopped

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JopKillerThe author of a California Chamber of Commerce-opposed job killer bill that would increase prices for consumers and businesses who utilize the services of independent contractors delayed a scheduled hearing this week so that discussions about the legislation’s “complex legal issues” could continue “over the next year.”

AB 1727 (Gonzalez; D-San Diego) had passed the Assembly Labor and Employment Committee on April 20 and was set to be heard in the Assembly Judiciary Committee on April 21 before the author pulled the bill from the agenda.

The CalChamber warned that the version which passed the Labor and Employment committee would have stifled innovation, created higher prices and costly litigation for consumers, jeopardized the use of independent contractors in almost every industry, and created uncertainty for years in California until the courts can resolve the legal debate of whether allowing independent contractors to set prices is lawful conduct.

In an opinion piece appearing the morning of the delayed hearing, CalChamber President and CEO Allan Zaremberg warned that the bill would limit workers’ freedom:

“For those struggling to make ends meet, the often more flexible hours afforded by independent contracting arrangements can allow them to work on their own schedule. It will also create a barrier to entry for new workers. Independent contracting opportunities allow workers to begin earning an income quickly, either as a long-term engagement or a temporary measure while they pursue other opportunities.”

Zaremberg underscored that the bill would cost jobs and hurt the economy: “Policy makers need to stop this job killing legislation. As opportunities in the new economy expand, we should find common ground to support what works for California’s consumers, its workers and our employers.”

The commentary pointed out that AB 1727 would make it harder for many of California’s thriving industries to work with independent contractors:

“AB 1727 would allow any group with as few as 10 independent contractors to act in concert to set the prices and terms of their engagement. This would put a chokehold on small businesses who will be forced to navigate potentially dozens — or even hundreds — of separate bargaining units. Not only would the end result make life difficult for our job creators, but it would make the cost of goods and services rise dramatically for consumers.

“The bottom line is that any service used to connect an independent contractor to someone who wants to hire them —including dispatch services, web sites, apps or any type of mediator — would be required to negotiate with these multiple individual bargaining units. Companies and consumers who rely on new, creative and cost-efficient services provided by independent contractors working in industries such as trucking, delivery, driving, child care, senior care, plumbing, and accounting, just to name a few, would be seriously impacted by this proposal.

“On top of all the other regulatory hurdles employers face in California, this proposal threatens the livelihoods of workers who want and need flexibility. It would disproportionally impact those areas of the state that are still struggling economically. Consumers would suffer with a smaller pool of contractors who would drive up prices so high that their services would simply become unaffordable.”

Video

CalChamber Policy Advocate Jennifer Barrera explained the negative aspects of AB 1727 in the CalChamber Capitol Report video distributed this week:

“The bill allows independent contractors to collectively bargain on terms of their contract, such as prices, when they will accept an assignment and when they will terminate an assignment. AB 1727 also includes the threat of litigation against consumers and businesses, with the threat of triple damages.”

Key Vote

The April 20 vote on AB 1727 in Assembly Labor and Employment was 5-2:

Ayes: R. Hernández (D-West Covina), Chu (D-San Jose), McCarty (D-Sacramento), O’Donnell (D-Long Beach), Thurmond (D-Richmond).

Noes: Patterson (R-Fresno), Linder (R-Corona).

Staff Contact: Jennifer Barrera

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Jennifer Barrera
About Jennifer Barrera
Jennifer Barrera, senior policy advocate, works with the executive vice president in developing policy strategy and represents the CalChamber on labor and employment, taxation and legal reform issues. Before joining the CalChamber in September 2010, she worked at a statewide law firm that specializes in labor/employment defense. She also advised small and large businesses on compliance issues, presented seminars on employment-related topics, and authored articles in human resources publications. Barrera earned a B.A. in English from California State University, Bakersfield, and a J.D. with high honors from California Western School of Law.