Illustration © 2020 D.J. Billings

What You Can Do to Save Your Freelance Career from AB5

Does California hate freelancers? With the introduction of AB5, it sure seems that way. You may have strong opinions about the new law (I certainly do). The ideas presented in this law are also being adopted by other states and Federally with the PRO Act. Since it’s possible that you’ve been living in a cave or you’re coming off a twitter sabbatical and you haven’t heard about it, we should start with some history and facts.

What is AB5 and why should I care?

AB5 is a California law that went into effect on January 1st, 2020. It comes out of a landmark Supreme Court of California case, Dynamex Operations West, Inc. v. Superior Court. In that case, the court held that most workers are employees, ought to be classified as such, and the burden of proof for classifying individuals as independent contractors belongs to the hiring entity.*

The intention of the original bill, according to California Assemblywoman Lorena Gonzalez (who drafted the bill) was to prevent the misclassification of workers by employers who sought to avoid paying livable wages, healthcare and other benefits that they would normally pay to part or full time employees.

This applies to any independent contractor working in the state of California. Exemptions are given to “doctors, dentists, psychologists, insurance agents, stockbrokers, lawyers, accountants, engineers, and real estate agents, as they are seen to generally directly work with and set their prices to customers.”*

The exemption is also given to graphic designers for the same reasons.

Maybe you’re not a California resident and you’re thinking this doesn’t affect you. Those Left Coast weirdos, right? Think again. There are changes happening around the U.S. that will likely affect all independent contractors, so wherever you live, you should have a good understanding of what’s going on.

* https://en.wikipedia.org/wiki/California_Assembly_Bill_5_(2019)

Oy vey, the controversy! So what’s the problem?

If you’re guessing that there would be a ton of angst over this law, you’d be right. People who had been happily working as independent contractors for their entire careers are suddenly being told they must become W-2 employees for every client they work with.

Freelance journalists are getting particularly shafted by the law, as media organizations that hired them previously dropped their contracts in favor of hiring part and full-time writers.

https://www.ccn.com/vox-cheered-californias-gig-economy-law-then-fired-freelance-workers

There are more stories being told every day about people whose income depended on being an independent contractor and have had to suddenly change the way they work to conform to the law. Some claim to have even lost their entire source of income due to AB5. California Assemblyman Kevin Kiley has been tweeting these stories and you can read them here: https://twitter.com/KevinKileyCA

Since the responsibility of adhering to AB5 lies with the hiring entity, many companies have chosen to either only offer W-2 employment or simply not work with California freelancers.

Truck drivers who previously enjoyed being independent contractors and even own their own rigs have also been affected, as they are now supposed to be classified as employees.

Musicians are also scratching their heads and wondering if they suddenly need to become employees of every bar or venue they play.

Why is this a big deal? What can you do?

First, let me offer the disclaimer that I’m not a labor attorney and my take on this is purely from observation and my own understanding of the law. Take my advice at your own risk.

So what’s the big deal? Can’t we all just work as W-2 employees and get on with our lives? For some, that might be an acceptable answer. For others who seek to retain their independent status, or who have invested heavily in tools and equipment, this can be a huge financial setback. 

If you want to stay indie, and you’re not already a dentist, there are still things you can do that don’t require you to go W-2 with your clients.

ABC test

The law exempts those independent contractors who can pass a 3-part test:

  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

If this sounds confusing, you’re not alone. Let’s break them down and apply them to real world situations:

A essentially means that you need to clearly be in charge of the work you do for your client. This doesn’t mean that as a graphic designer you can’t take direction in terms of what size they would like their flyer. It means that in the actual performance of the work they are not spelling out what days and hours you need to be working, where you need to be working, how you use your mouse, or what applications you use.

B is the one that’s problematic for journalists. If you’re writing a news article for a news organization that publishes news articles, you’re in the same business. If you make cakes for corporate retreats, you’re in a different business. If you create animation for a marketing firm’s presentation, you’re fine. If you create animation for an animation studio, you are supposed to be classified as an employee.

C is pretty cut and dry. If you’ve been doing virtual assistant work for years for multiple people and/or companies, then you can keep on keepin’ on as an indie contractor.

If you can pass that test, then you’re fine. But that’s just you. It’s crucially important that you’re able able to convey this to prospective clients who have concerns about whether or not they can hire you.

It’s crucially important that you’re able to convey this to prospective clients who have concerns about whether or not they can hire you.

When I grow up, I’ll become a real business!

One solution that Assemblywoman Gonzalez has been throwing out there is to simply become an LLC. I get what she’s saying. You need to treat your freelancing as a real business, and I agree. 

However, in California creating an LLC can be complicated and expensive to do correctly. You also open yourself up to a lot of tax issues, as well as an $800 minimum tax every year, whether you make any money or not. I’ve gone down this road myself and it’s not fun.

Some freelancers have had success meeting requirements of both the law and clients by simply filing a DBA and using a Federal Tax ID number rather than their Social Security number. In some situations, it can be that easy.

A Few Simple Things

I would advise this for any freelancer regardless of the law, but you can do some really simple things to make it easier to hire you.

  • Get business cards printed. I mean, come on. You should have these anyway.
  • Create a website. It doesn’t have to be fancy. A basic free WordPress or Wix site will do if you don’t want to go whole hog or actually conduct business online. But I have to ask, what century did you arrive from? And hey, was it really more polluted back then?
  • Get a separate checking account for your business. Employers aren’t going to care about this, but it’s one more way to show that you’re serious about running your business.

Opinions. I have them!

Of course I have strong opinions about this law, I’m a freelancer and I run multiple businesses in California. I believe that the burgeoning gig economy is going to take a huge step back.

I wasn’t happy to see this signed so quickly by Governor Newsom. It really should have been put to a vote by the people. I believe that any time we have government leaders deciding what’s best for us without input from their constituents, it means that there’s an agenda that has nothing to do with what the people actually want. And I believe that’s the case here. No one was asking for this bill, with the exception of the unions. While I believe that workers have the right to organize without interference from their employer, I also believe we have the right to remain independent.

Currently, the PRO Act bill is making its way through Congress, which is essentially the same as AB5, but on a national level. While on the surface the intent appears to protect workers, it’s actually doing harm to those who wish to remain independent.

Stepping off the soapbox…

The best thing that California freelancers can do to offset the effects of AB5 is to do everything in our power to conduct ourselves like a business.

Also, make your voice count. Contact your representative and get on social media and tell your story. Follow me on twitter, I want to hear from you!

If you need help or have questions, I’m here for you! Comment below or email me at dj@workathomegeek.com.

 

Photo by elizabeth lies on Unsplash

Today was kind of a weird day for me. It’s Monday, and usually coming off of a weekend (wait, what’s that?) I am all kinds of productive. For me, Mondays are my git-er-done days. I don’t really know why. I drink just as much coffee on those other days that don’t start with M.

But some days I’m just not feeling it and today is one of those days. I don’t know why, maybe my chakra is misaligned with the snow moon in my seventh house of cards. No real reason I can point to. But there it is.

I still got the work done. I had client work that I couldn’t just ignore, because there are other humans counting on me. Of course I had to do that work. But my moving-forward stuff, my hustling, my passive income-building activities are just kind of floating around my head like drunken bees singing, “I don’t wanna work, I just wanna bang on me drum all day…” I didn’t even want to write this post, but it’s on my calendar so if I don’t, I’ll probably have nightmares about notification badges pounding on my front door. Wouldn’t be the first time.

One of the things that people don’t realize about starting a freelance career is that it’s not all watching YouTube makeup tutorials in your underwear and sipping expensive teas from Mawlamyine. If you get kinda lazy on the 9-to-5, you can usually get by without anyone noticing – sometimes for a few days, even. But when you freelance, any time you spend being lazy is time lost bringing in new clients or marketing. Then you have to make it up later, and no, you don’t get overtime because it’s a national holiday, like Super Bowl Sunday or the Oscars. No soup for you!

So yeah, I’ll do the stuff. Maybe today won’t be one of those Shining Glorious Mondays where I accomplish ALL OF THE THINGS and still have time to invent a better method for stirring natural peanut butter. But at least I’ll know that I am moving forward, one step at a time. There will be another day where I can channel a carpenter ant on an endorphin high. Today is more… sloth on espresso.

Looking at you, Tuesday.

A Super Simple Method for Tracking Your Monthly Income

Do you know how much money you have coming in this month? I mean, from all sources. Your paycheck, your business, your side hustle, poker nights, all that yarn you have on eBay… whatever.

If you have one job or contract and you collect a regular paycheck, it doesn’t take much mental energy to get a sense for how much you’ll have to pay your bills and keep your cupboard stocked with chocolate and whiskey. When you work consistently, you typically get paid consistently and that’s super cool.

However, when you work on multiple projects, and you’re not working under any longterm contracts, your pay may not be so regular and it can be harder to know. Suddenly it’s the 28th and you have to check your account balance to figure out if you can pay to live another month. I hope that’s not the case and you have so much money coming in that it’s a no-brainer. Still, documenting your earnings and knowing what’s coming down the pipeline is a good practice.

I’ve been freelancing on many different projects for the past 12 years. Like all businesses, my income has had its share of highs and lows. For a long time I spent a good part of my weeks obsessively tracking my billable hours and worrying about when my next project would start. I never had a clear picture of what the next few months would bring. That was stressful and I wasted a lot of time worrying about stuff I could actually track.

Then I learned about tracking my monthly income using a pipeline spreadsheet. I’ve been using this method since 2014 and it’s made things much clearer for me.

As you’ll see, this thing is super simple. Each month is laid out in columns. In the first column under the months, you list your different sources of income, each with its own row. In the next columns within those rows, you enter the amount of income you expect to have come in that month.

An important distinction is that you’re not listing what you hope you’ll make, but what you actually have coming down the pipeline. As in, what you’ve already earned and is either in your checking account or on the way.

The last columns and rows calculate totals for you. At a glance, you can get a really good picture of what you’ll be paid in the very near future. As a bonus, when you look back over the year you can analyze your earnings. Because I’m a geek, I create charts of income for different categories through the years.

If you’re a spreadsheet wiz, you can make this yourself pretty easily. The formulas are simple sums. If you hate setting up stuff like this, I created one for you as a Microsoft Excel file. It’s a free download right here: Pipeline Spreadsheet

How it Works

I’ve added all kinds of fancy arrows and callouts in the image below, but I’ll also give you the rundown.

The top row is just the months of the year. Easy peasy.

The first column is where you will list your sources of income. You can see from my example that I list four. This is really up to you, you can split up different contracts or projects or just combine them all under “Freelance.”

In each monthly column, you simply list any income you know is coming for that category. I update this every time I have something new come in. Below that, I list each client and the amount I expect to receive from them. It’s not necessary but I find it helpful. Again, the amount you put in the income cell is only what you know is coming in that month. Not what you wish will come in or a lofty guess. This is for any money that’s going to hit your account for sure.

Note: I have a separate spreadsheet for all my passive income sources. I think I mentioned that I’m a geek.

On the far right in column N is the sum of your monthly income for each category. This calculates automatically because there’s a formula in that cell that tells it to. If you edit the cells in column N, they will cease to function and you’ll have to go old school and add them up yourself.

Similarly, Monthly Totals and Year Total update automagically, too. Isn’t that fun?

That’s really it. Super simple. As you do this throughout the year, I think you’ll find that you can better predict what’s coming and you’ll lose a little tension about it. Even if you see that June is looking a little weak, at least you’ll know that you need to do something about it. “Knowledge is power,” as the inventor of the spreadsheet famously said. Yes, I just made that up. But it feels true.

If you have any trouble with the download, the spreadsheet, or just frikkin’ making it rain every month, let me know. I’m here to help.

Photo by Shine Xiong on Unsplash

SHOOSH!

I grew up in a library. Okay, I didn’t actually grow up in one, like some weird, Dickensian mongrel child raised by librarians and hiding in the dumpsters at night. I just went in them a lot.

Yeah, I was that geek. As a kid I spent most of my time outside of school riding my bike to the library (on my own, which in 2020 is apparently a capital offense in several states) and burying myself in the stacks. There were also Saturday movie matinees (on a 16mm projector back then) and records to listen to. You could even check out puppets. No kidding. Puppets.

As parents and homeschoolers (double geek), Jenni and I fostered a love for the library in our kids. Any time we’ve moved to a new city, the first thing we do is go get library cards. Often before getting our new driver’s licenses, because the DMV sucks and books are forever.

The past year, our youngest was involved in two local youth productions. My job was to take him to rehearsals and make myself scarce (mostly at his request). Since rehearsals lasted about two hours in the late afternoon, I would haul my laptop and work stuff to the local library so I could at least get some work done while I hid my shameful adultness from the youths. Our local Los Angeles County library has decent WiFi, big tables, and outlets. It’s basically a 100% free co-working space. Sound cool? It kind of is cool. However, there are some trade-offs you make when you work out of a library. Not deal breakers, more like little compromises.

First come, first served

You have to grab a table fast. Most libraries have ample table space, but sometimes you’re competing with someone who brought their entire law library and schematic diagrams with them. Real estate is precious here. Kind of like outlets. Similar to a coffee shop, you have to snag your power fast.

No Coffee

Speaking of coffee, they don’t serve it. You have to bring your own. No, you can’t check out a Chemex. I’m not sure you can even get puppets anymore.

WiFi

It’s usually pretty decent if you’re not on BitTorrent or doing some crazy downloading. That’s sort of frowned upon anyway. You usually need a library card to log in, but that’s free. Sometimes it can take some fanoogling to get hooked in, and don’t count on the library staff to help you. They can give you the basic instructions, but they’re not your personal IT department.

Headphones. Headphones. Headphones.

I wrote that three times so neither of us will forget. The couple times I forgot, I seriously regretted it. Libraries have changed since the 1970s. No longer is there a sweet old librarian gently shooshing people when they get loud. They don’t do that anymore. So unless your ears are plugged and cranking The Sex Pistols, you’re going to hear every detail of how Clive’s Toastmasters meeting went.

The other thing that’s changed is that children are now encouraged to play freeze tag in the stacks. Somewhere, right now, thousands of sweet, dead librarians are spinning in their graves. I don’t blame the kids. They aren’t allowed to play outside their homes anymore without a government-approved guardian standing watch, so they have to get their yah-yahs out somewhere.

Headphones will save your life.

Oh yeah. Books

Did I mention that they have books? They do and they’re all free to borrow. You can’t do that at Starbucks or CoWorkNation. It’s pretty cool because sitting in the middle of a library with all those resources at your fingertips can inspire new ideas. It does for me. I can’t visit the library without browsing a few titles at random. You can borrow CDs and DVDs, too. Did I mention it’s free? It’s free.

Do yourself a favor and go get a library card. Take your laptop or Bullet Journal or giant schematic diagrams and give working at the library a try. They’re still an amazing resource and the more we use them the better chance they’ll stick around for a while.

Photo by Hack Capital on Unsplash

“Washington Mutual, how may I help you?”

That was me. I was sitting in the middle of a call center in the San Fernando Valley, with a headset on and my fingers poised at a keyboard. It was a late and chilly Thursday night as I worked the night shift as a CSR for Washington Mutual Bank. I was one of those faceless people on the other end of the phone who help you figure out why the ATM ate your debit card. I got screamed at by angry people when their cards were declined and told how amazing I was when their account balance was higher than they had recorded. Not that I had anything to do with either. If it had been up to me, I would have just given everyone a little financial boost, sort of like Matthew Broderick in WarGames. Sadly, that was not in my power. I was just a telephone bank clerk.

It wasn’t horrible, but it was definitely not where I saw myself at 30. We lived in a tiny apartment next to an industrial park. Our two kids shared a bedroom. Jenni had a coupon book that magically provided groceries we couldn’t otherwise afford. Our little car had no AC and a clutch that worked when it wanted to.

Just the year before, we were living in New York City and I was head of the storyboard department for the globally phenomenal TV show, Blue’s Clues. It was a glamorous, high-paying job and it was so amazing that I… gave it up. I know, right? After only a short while in television I got this bee in my bonnet that we could move to Los Angeles and I could work in animation there.

That didn’t happen as quickly as I imagined. The few things that I had lined up before we left NYC fell through and I was suddenly very much unemployed. I continued to freelance for a couple of directors on Blue’s Clues, but it wasn’t quite enough to keep our heads above water. Credit cards suddenly made possible what my low income could not (hot tip: don’t do that).

When the credit card delinquency calls started, we knew that we couldn’t go on much longer like that. I did the only thing that made sense, which was to get any kind of job I could find, and fast. 

Hello, headset.

It was on that chilly Thursday night that my friend and animation director called me from NYC and asked how things were going. When I told him, he offered me a job doing animation on Blue’s Clues again, on a freelance contract. My heart took a leap and almost knocked me out of my swivel chair. Small wrinkle: I had to actually be in NYC. Still, it was more money than the call center and I could bandage my wounded pride, so ultimately I said yes. Two friends graciously offered their floors to sleep on, and back across the country I went. Jenni and the kids stayed behind in our tiny Valley apartment on stilts. It wasn’t ideal, but it was a solution that paid the bills, even if temporarily.

I was back in animation. I turned in my headset and felt a renewed sense of pride that I lost when I took the job at the bank.

Not long ago, there was a big ol’ hubbub about Geoffrey Owens, an actor known for The Cosby Show, when someone found him working at a Trader Joe’s in New Jersey. He hadn’t had any steady acting gigs in several years, His residuals also dried up when networks pulled the reruns because of Bill Cosby’s lesser-known work of abusing women was finally brought to light. So he did what he had to do. He got a job to pay the bills. And of course, as soon as he was “discovered,” the internet shamed him for falling off Mount Olympus and ringing up groceries for mortals.

With all the media attention, he was soon offered a job on several series and films. Later he said, “I found myself in the dark wood of unemployment and debt, but instead of switching careers like a sane person, I took a job at a local Trader Joe’s to see if I could hang in there with my career and it’s actually worked out pretty well,” he said. “I’m Geoffrey Owens and I’m an actor!”

In a separate interview, Owens also summed up the way we need to think about work in general:

“…[O]ne type of work is not better or superior than another type of work, so we reevaluate that whole idea and start honoring the dignity of work and the dignity of the working person.”

I’ve often asked myself what I would have done if I hadn’t been invited back to freelance on Blue’s Clues. Between the two gigs, I definitely had a preference and it wasn’t staring at a screen all day… except that ironically, I did end up staring at a screen all day, just a very different screen. TV paid more and was certainly more interesting than reciting bank lobby hours over the phone.

I’m still not ashamed that I took that bank job. Ten out of ten debt collectors and kids agree (there have been several joint polls, I’m not going to find them for you), paying bills and eating dinner are overwhelmingly preferred.

Much of getting what we want in life comes down to persistence. If you really want something, you have to ask yourself if you want it enough to keep doing it even when the chips are down, your back is against the wall and Kylo Ren won’t stop chasing you (a limited demographic, I admit).

If you want it, you’ll do what you have to do. The only shame is in giving up when it gets too hard.

For more inspirational quotes such as, “Don’t give up, just go on!” and a song by a skating snail, check out Blue’s Big Musical Movie*. Look me up in the credits and say hi.

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