What role should the government play in regulating business?
It’s a tough and touchy question: should individuals have the right to act freely as their own independent agents of commerce, regardless of the outcome, or should they be provisioned rights and responsibilities within the system implemented and enforced by the government?
Regardless of your political compass, it’s worth considering all sides of the question. There are many implications from the way legislation impacts companies, employees, and customers in business.
Consumer Protection Laws
Consumer protection laws protect consumers from fraudulent, defective, and negligent goods and services. It aims to correct informational asymmetry, wherein the seller usually has more information regarding the product’s manufacturing and potential flaws that the buyer may not be immediately aware of at first glance. Without consumer protection laws, it may be nearly impossible to hold manufacturers, distributors, and retailers accountable for knowingly or unknowingly selling products that do not perform or function as stated. The state and federal laws that protect consumers are healthy for commerce in general; the more honest sellers are, the more confidence buyers have in making purchases, which altogether facilitates more efficient transactions.
The AB 5 “Gig Worker” Law
The AB 5 law, known as the “gig worker” law, requires that companies reclassify independent contractors as employees if those contractors do not meet the criteria of the status per the “ABC” test. Examples of gig work include car-for-hire or food delivery performed by independent contractors who may work online, on-call, temporarily, or part-time.
Many believe that companies would rather not employ the workers that their businesses heavily rely on, effectively allowing them to access their labor without being bound to the obligations of an employment contract. The AB 5 law is intended to protect workers from unethical and exploitative business practices.
In the commercial trucking industry, rule “B” does not align with many trucking owner-operators. The work that they perform is integral to the day-to-day operations of the business that hires them, but they operate independently in every other sense. The regulatory change has made it so that many Californian truckers had no choice but to incorporate and acquire coverage through their Local Insurance Company in order to continue operating in the state. Many owner-operators have invested enormous amounts of time, energy, and money in customizing their equipment, which is why they wish to operate as independent business owners instead of becoming employees. They will need to expand their executive skill set, which isn’t necessarily what these workers signed up for when they first started. In allocating more resources to administration, many have consulted with San Diego Trucking Insurance experts to protect their businesses from risks and penalties.
The AB 5 law has stirred uproar and debate, as the industry remains torn as to whether or not the law hurts or helps everyone involved. The contention isn’t expected to simmer down any time soon, as this particular piece of legislation has affected the gig economy in an unprecedented nature.