The Freelancers Union wants me to write my state senator and voice my support for California Senate Bill 988, called either the “Freelance Isn’t Free Act” or the “Freelance Worker Protection Act” depending upon who you ask.
I’m not sure if that’s a good thing.
This post talks about:
What is a freelancer?
Semantics are semantics.
I do not choose to refer to myself as a “freelancer”—my preferred term is “sole proprietor.” But for practical purposes there is no real difference between a non-incorporated freelancer, sole proprietor, independent contractor, or whatever word you want to use to describe people who conduct business on their own without creating a partnership, a limited liability company, or some type of corporation. (If I incorporated, I’d have to pay the state of California $800 a year, as we will see later.)
But in certain circles, the term “freelancer” is in vogue, and I really don’t have a problem with it.
Look for the union label
There’s even a union. Sort of.
The Freelancers Union, based in Brooklyn, New York, advocates for freelancers. My major point of contact with the Freelancers Union has been the SPARK groups that host meetings on a monthly basis. Between 2020 and 2022 I was regularly attending the virtual (COVID-imposed) meetings of the Orange County, California SPARK group. The meetings have definitely been helpful; that’s where I learned about brand archetypes, and it’s where I learned about the business-to-business exemptions for classifying workers as employees or non-employees in California. For example, I learned that California Assembly Bill 5 (AB 5) was superseded by Assembly Bill 2257 (AB 2257).
While Orange County is changing, it still has a reputation as a not-so-leftist place, so our local SPARK chapter didn’t march around and create rhymes and call people scabs.
Actually, the Freelancers Union isn’t really a union. We don’t pay dues (although the Freelancers Union accepts donations), and we don’t picket against clients who don’t support the union. For obvious reasons, since a single picketing freelancer can’t shut down a company in the same way that a mass of picketing employees can shut down, say, a Starbucks. (Or try to.)
But while the Freelancers Union can’t strike, it can impact legislation.
The first “Freelance Isn’t Free” law
The Freelancers Union’s initial target jurisdiction was its home city of New York, where the first “Freelance Isn’t Free” law was passed in 2017.
Several of the new rights granted under the law include a right to a written contract and timely payment for work performed and freedom from retaliation and discrimination when they exercise their rights. In addition, the law provides for an award of double damages and attorneys’ fees to freelancers who prevail on their claims in court.
From https://blog.freelancersunion.org/2018/05/15/how-to-file-a-nonpayment-claim-with-the-nyc-department-of-consumer-affairs/
The Freelancers Union and the city of New York define “timely payment” as net 30 terms.
Which reminds me of a bandleader I used to know.
California knows how to party
As some of you know, my 25-year history with IDEMIA stretches back a long way. I started with a company called Printrak International, at the time an independent company first privately owned, then traded on NASDAQ. Despite its lofty position as a publicly traded company, it was a pretty small, informal outfit.
Until Printrak was acquired by Motorola, a huge multinational firm with almost 150,000 employees and a presence in police radios, cellular telephones, and many other industries. While the company shrunk during the years I was an employee, it was still a pretty big outfit.
One thing that didn’t change was the annual Users Conference held for the law enforcement agencies that used our software. By the time Motorola acquired Printrak, that software was called Omnitrak, and would later be renamed Printrak BIS.
The Users Conferences (which IDEMIA continues to this day) have always been a mixture of education and entertainment. Education in the form of training in the use of Omnitrak/Printrak BIS and in forensic techniques, and entertainment in the form of a midweek party and an end-of-week banquet.
That’s where my coworker comes in. I’m not going to refer to him by name; for purposes of this blog post I’ll refer to him as “Cliff.”
Now Cliff, who had been with the company longer than I had, thought he’d do a favor for his employer Motorola. He’d assemble a band to play at the midweek party and bill Motorola for the band’s services.
That’s when Cliff learned just how big Motorola is.
You see, if you want to do business with a big company like Motorola, you have to play by Motorola’s rules. And in the case of Motorola, that meant net 45 terms.
So Cliff wouldn’t get paid for 45 days, but he’d have to pay his band members long before that.
Ouch.
California knows how to legislate
Now if the Freelance Isn’t Free Act provisions had applied at the time, Motorola would have been required to pay Cliff within 30 days. However, this incident occurred long before the Freelance Isn’t Free act was passed, and the incident occurred outside of the jurisdiction of New York City.
While versions of the Freelance Isn’t Free Act have been passed in a few other jurisdictions, including the city of Los Angeles, the state of California was not governed by such a law.
That may change.
We have some exciting news! Just last week California State Senator Scott Wiener introduced Senate Bill 988 (SB 988) or as we like to call it, the Freelance isn’t Free Act. As in other parts of the country, where we have been successful in implementing similar laws, it aims to ensure fundamental protections for freelance workers, enforced by the State Labor Commissioner and the Attorney General. These protections include the right to a contract, prompt payment within 30 days of completing work, and the right to double damages for non-payment.
From https://blog.freelancersunion.org/2024/02/08/new-legislation-introduced-to-expand-freelance-protections-to-california-state/.
It turns out that Senator Wiener didn’t adopt the Freelancers Union’s preferred branding, and instead called his bill the “Freelance Worker Protection Act.” I don’t know if this means that I’m supposed to picket the Senator, but the bill title is what it is.
Why do we need a bill covering all of California when there’s already a bill in Los Angeles? The Freelancers Union addresses this:
Similar legislation was passed in the City of Los Angeles in February 2023, but it has limitations, notably covering only work performed within county limits. Given the rise of remote freelancing, especially due to the pandemic, this loophole disincentivizes hiring freelance workers residing and working in Los Angeles.
From https://blog.freelancersunion.org/2024/02/08/new-legislation-introduced-to-expand-freelance-protections-to-california-state/.
We’ll come back to this in a minute.
The pros of CA SB988
As a freelancer, CA SB988 obviously benefits me, primarily because it helps me get paid. If a client stiffs me, I can sic lawyers on them and then the client will REALLY have to pay.
Enough said.
The cons of CA SB988
However, not all is rosy for freelancers if SB988 passes, and it potentially impacts me personally.
A couple of years ago, I signed a contract with another multinational company. And this contract has net 90 terms. I’m not all that happy about it, but if this is what it took for me to do business with that company, then this is what it took.
If SB988 passes, then I will need to go to this multinational and inform them that since I am a California resident, those 90 day terms are now illegal, and you will have to amend these to net 30 terms if you wish to enjoy the marketing and writing services of Bredemarket.
And of course I’m sure that the multinational will readily agree…
…that because of the requirements imposed by the state of California, perhaps the multinational doesn’t need to do business with Bredemarket any more. There are certainly talented writers in South Dakota or India who can write things that are “good enough” for this particular multinational.
At this point it is impossible to predict the number of freelancers who will lose some income because their clients insist on terms greater than net 30. Because the similar Illinois law won’t go into effect until July 1, and appears to only affect contracts executed after that date, it’s too early to tell whether large companies will refrain from doing business with freelancers in Illinois due to the state’s “onerous” conditions. The same could hold true in California.
Could freelancers in certain states be shut out of contracts? It’s already happening with employees. And one person who employed someone from California found out the hard way that California labor requirements can be onerous:
You’d think that I could simply tell them (the California Employment Development Department) that I’m not doing business in California and be done with it. No — California defines “doing business” in a number of ways, one of which is to have more than 25% of your payroll in California. Which I had, because I had only one employee.
So now, because I employed one of their residents, I’m fully subject to California regulation. I have to file all of the employment-related forms, including those pertaining to withholding and unemployment insurance (which I expected). I also have to register my company with the California Secretary of State and renew my information every year or face penalties, and apparently I have to file a corporate income tax return
You’d think I’d be able to file a simple return, file zeroes on it, and be done with it. But no — I had to pay my accountant to do it, and the form is literally 42 pages long. That cost a few hundred dollars. And in the end, I still owed them $800. For 2019 alone; I’ll also owe them for 2020 and 2021.
I owe $800 for the “minimum franchise tax”. California charges this fee to everyone for the “privilege” of “doing business” in California, whether they have revenue or not. Only a few states have a business franchise tax, and California’s is wildly higher than anywhere else. This is in addition to California’s generally out of control taxes.
From https://ccleve.com/p/dont-hire-remote-employees-living.
So if California ends up being marked with a big red X by employers, will California also end up being marked with a big red X by companies hiring independent contractors?
Time will tell.
Bredemarket 