AB5: Now is the Time to Help, Not Hurt Small Businesses in California

By Carl DeMaio

If Governor Gavin Newsom and California Democrats really wanted to help struggling small businesses and millions of unemployed California workers they would immediately suspend or repeal a variety of damaging and costly taxes, mandates and regulations that have been choking the California economy for years.   

At the top of the list of relief should be the repeal of AB5.

Last year Governor Newsom and the Democrats passed AB5 into law to ban the use of independent contractors in California and impose stiff penalties on small businesses for hiring independent contractors. AB5 is an outrageous attempt to deprive Californians of the freedom to work, destroy the once-booming gig economy, and boost government tax revenues by forcing independent contractors and their clients to pay higher employment taxes. 

Even before the Coronavirus, AB5 had devastated hundreds of thousands of workers already – and now AB5 is one of the biggest obstacles for unemployed Californians seeking what little work is available.

Gov. Newsom has the power to suspend AB5 completely so small businesses and independent contractors can find work during these challenging times. I want to commend Assemblyman Kevin Kiley for leading the fight to ask the Governor to do this, but Newsom has refused to do it.

What’s worse, Gov. Newsom is weaponizing the Coronavirus federal bailout program to enforce AB5 and punish small businesses and independent contractors.

President Trump wisely included independent contractors in the unemployment insurance provisions of the federal Coronavirus bailout program since many have lost their clients during the shutdown.

Unfortunately, Gov. Newsom has instructed the state’s Unemployment Insurance Program to use the federal bailout funds to collect data and evidence from independent contractors when they seek the unemployment benefits to build enforcement cases against small businesses that used independent contractors after January 1, when AB5 went into effect. 

I have heard from many independent contractors who fear if they apply for federal unemployment benefits, they will get their small business clients in trouble under AB5. 

Punishing struggling small businesses and independent contractors is NOT what we need during this economic crisis. 

If California politicians are serious about helping ease the economic impact of Coronavirus they need to start by repealing or suspending AB5.

Concerned taxpayers who agree that California politicians should suspend or repeal AB 5 can help send a message today by signing this petition: DefendFreedomtoWork.org

Carl DeMaio is Chairman of Reform California.