A bill that risks ending the sharing economy as we know is close to becoming reality in California.

Assembly Bill 5 calls for sharing-economy workers, contract workers like ride share drivers or online writers, to become official employees. It passed the California Assembly Floor on May 29th and the Senate Labor Committee on July 10.

More specifically, the bill will narrow the definition of an independent contractor to meet three conditions: the worker must be free from the company’s control, the worker must do work that is not central to the business, and the worker has an independent business in the industry.

If the business is not able to meet all three criteria, then the independent worker will be categorized as an employee and will be automatically enlisted in employee benefits like overtime pay, health coverage, and more. If the bill passes the Senate and is approved by Gov. Newsom, it will result in serious ramifications for businesses, consumers, and employees in the state of California.

These restrictions will kill worker freedom.  And businesses will raise prices in order to keep the lights on.

Large businesses are not the only suppliers to take a hit. Small, online businesses also partner with contract workers for services such as writing, consulting, marketing, graphic design, and more. For companies with thin profit margins, this legislation could force them out of the market – and out of California.

Finally, 8.5% of California’s 19-million workforce worked via independent contracting in 2016. This comes out to over 1.5 million workers, according to the Bureau of Labor Statistics. This number is certainly growing, as the state’s entire workforce has grown by 500,000 since 2016. Potentially 1 in 10 California workers will suffer the costs of misguided labor policy.

AB is an attack on worker rights, hours, flexibility, and the free market. It would be another crushing blow for a state that is one of the leaders in bad ideas, and cause out-migration for people who can’t afford it anymore.