The Devastating Impact of AB5 on People with Disabilities and Their Families

This month, sweeping economic changes to the way Independent Contractors are able to conduct business became chiseled into law in California. Despite protests from hundreds of thousands of California’s tax-paying citizens, Lorena Gonzalez-Fletcher, author of AB5 which codified the Dynamex ruling of 2018, was unrelenting in her stance that the majority of freelancers without business licenses should legally be classified as employees. There were carve-outs in the law, however, they are primarily arbitrary, absurd, and not reflective of how Independent Contractors actually work. The law caused financial devastation for a substantial segment of California’s population, including people with disabilities who are working or who have worked, and their families. This article provides and in-depth look at the challenges they face, and explains why a business to business exemption is not possible in a majority of cases, and is ableist and discriminatory.

Working While Disabled

For people with congenital disabilities or those acquired from an accident or illness, facing the social, financial, and health-related barriers to traditional employment can be devastating. According to the Department of Labor, the percentage of disabled people who work is only 19 percent. For many of them, education and training do not level the playing field, as employers are often resistant to making offers of employment to candidates who they fear may need adaptations to the work environment, miss excessive amounts of work due to health issues, or require extra time to complete tasks. While their concerns can be completely unjustified, employment biases are still a reality people with disabilities face. Working as an Independent Contractor circumvents these issues and allows individuals to acquire work based on their unique skills, talents, and abilities — not on an arbitrary body standard that they cannot meet. It also allows them the freedom and flexibility to choose the type and volume of work that will not exacerbate health issues. While this may mean less income initially, they often end up with a better quality of life and more disposable income because they do not have to incur additional work-related expenses or health issues.

Working independently from a home office also has other less-obvious benefits for those with disabilities, including:

• Less physical and emotional stress which can cause further decline of health, or create co-morbid conditions such as high-blood pressure.
• Less wear and tear on their bodies which, for people with life-long mobility impairments, can help stave-off post-impairment syndrome (severe arthritic changes that further degrade health and mobility).
• Elimination of the significant challenges of getting to and from work, particularly for those with vision impairment, epilepsy, or a disability that prevents driving such as Hemiplegia.

The Cost of Disability

Being disabled, or having a disabled family member can cause a significant financial strain on families that can be offset with some paid part-time work. The following statistics were taken from the Morbidity and Mortality Weekly Report (MMWR). Lifetime costs for the following common disabilities are:

· $921,000 (persons with Cerebral Palsy)

· $383,000 (persons with hearing loss)

· $601,000 (persons with vision impairment)

Additionally, the Christopher and Dana Reeve Foundation estimates the annual cost of living with a spinal cord injury at $42,000 to $184,000 per year. The figures for Multiple Sclerosis are even more daunting: an estimated lifetime cost of 4 Million Dollars.

If you, or a loved one has a disability, you know that if you/they are on SSDI, thousands of dollars of medical, dental, durable medical equipment, and pharmaceutical expenses per year are not covered and are the responsibility of the patient and his or her family. The Medicare website estimates out-of-pocket costs to be approximately between 7–8K annually for a healthy retired person. For a person with a disability who has hefty drug co-pays or needs uncovered durable medical equipment such as a lift in order to take a shower, help with activities of daily living, or who requires surgery for any reason, those costs are significantly higher.

While a fraction of people with disabilities can get extra help from another entitlement program, SSI, this is extremely difficult to qualify for, particularly if you have worked for a number of years, and have more than 2K in assets (not including the home you live in or a vehicle). The conundrum is that if you have a disability, you need savings for emergencies. For example, if a needed piece of DME like a wheelchair breaks, the approval process for a new one can take months leaving the disabled person home or even bed-bound during the wait. If one is disabled and has a working spouse, the odds of qualifying for help are almost non-existent, as the monthly income limit is $1,175 for a couple — barely enough to cover rent in most California locations.

On SSDI and Disabled

In order for someone with a disability to qualify for SSDI he or she must have earnings over a set amount for at least 40 quarters, and meet detailed medical criteria. Many applicants to the program must wait years to have their cases heard before an Administrative Law Judge who will analyze medical records and statements from Doctors and other medical professionals. Someone with, for example, mild Cerebral Palsy, who was an independent ambulator in their youth, in their late 40s and 50s may have declined physically from post-impairment syndrome that requires them to use a walker or wheelchair, impacts the use of their hands, and causes them significant pain which must be treated with muscle relaxants. Likewise, someone who was diagnosed with Multiple Sclerosis in his twenties may be quadriplegic in his 40s. In any case of someone receiving SSDI, he or she has experienced a significant decline in function that impairs the ability to work.

This does not mean that the disabled individual cannot work at all. In fact, the Social Security Administration allows for individuals to do a small amount of work. It sets caps on what can be earned per month (for 2020, the amount is $1200). If the disabled individual earns above this amount for nine non-consecutive months or more, he or she is found to be engaging in Substantial Gainful Activity (SGA).

The AB5 Business License Exemption

Gonzalez has proposed a work-around for Independent Contractors: a business license. A business contracting with another business can be exempt from AB5. According to her, even being a Sole-proprietor meets the requirements of the law. For people with disabilities on SSDI, this “option” will threaten needed benefits including healthcare. Owning a business obliterates the SGA rules when it comes to SSDI because one can be found to be non-disabled based on combined income earned, and the extra unpaid time spent running the business (see the regulations). This can cause benefits to cease, regardless of income generated.

More so, many companies who continue to work with California freelancers are requiring that they have an S-corp or LLC. While this is understandable, as these companies are trying to protect themselves, it does not bode well for people with disabilities and their families. The cost of the license itself is also prohibitive for family members who may be Independent Contractors– $800 per year for an LLC., for example.

Family and Spousal Caregivers

According to the Family Caregiver Alliance, 43.5 million caregivers have provided care to an adult or child in the last twelve months, with 32.5 million of them providing care to an adult age 50 or older. The estimated economic value of the unpaid services they provide is 470 billion dollars annually. Seventy-five percent of all caregivers are female, with an average age of 49.2 years.

Family and spousal caregivers are often forced to balance their time between paid work and care giving duties. Many have to leave the traditional workplace environment early due to the care needs of their loved ones. It is this group that most benefits from the flexibility that Independent Contract work permits. It should not, under any circumstances, be further burdened by needing to incorporate in order to work.

Gig-economy Businesses That Benefit People with Disabilities

There are many online businesses that make life with a disability easier. Some of the basic conveniences that an able-bodied person can take for granted like grocery shopping, driving to doctor’s appointments, or picking up prescriptions can be a strain for people with disabilities. With the average cost of an agency-vetted personal care assistant at 26 dollars per hour or more, and most agencies requiring a four-hour or more minimum, gig-economy businesses can provide needed services at a fraction of the cost. Uber, for example, charges the same rates for WAV (wheelchair equipped vans) and ASSIST (extra help for people who need it) as they do for standard UBERX. Instant Cart provides grocery shopping services at a nominal cost (they will even put the groceries away). Postmates will make pharmacy runs for a few dollars. Because of AB5 rules and corresponding litigation, rates for services like these have increased, with people with disabilities being among those footing the bill.

When a Law Becomes Punitive

Gonzalez, in a recent interview with KUSI repeatedly stressed that Independent Contractors without business licenses, as well as businesses who contracted with them were working outside of the law since Dynamex. She neglected to mention Independent Contractors pay taxes according to IRS regulations, and are overwhelmingly choosing contract work over being employees. If Dynamex and its codifications, AB5, are in opposition to California citizens earning an honest living, then they should be repealed. This country has endured plenty of bad laws that victimized and segregated citizens — among them Jim Crow laws — and those public servants who who voted for and uphold AB5 are continuing this bigoted, harmful history.