California Gov. Newsom signs law reclassifying some gig economy workers
California Gov. Newsom signs law reclassifying some gig economy workers
The CEOs at Uber and Lyft opposed the legislation saying it would cause their companies harm. File
21 September, 2019, 08:29
The landmark California gig economy bill that may force companies such as Uber, Lyft, and DoorDash that employ thousands of drivers as independent contractors to hire those people as employees became law today.
Assembly Bill 5 (AB5), introduced by Assemblywoman Lorena Gonzalez in January, meant to codify a recent state U.S. Supreme Court decision into law.
Newsom said a next step was "creating pathways for more workers to form a union, collectively bargain to earn more, and have a stronger voice at work - all while preserving flexibility and innovation".
The bill is slated to go into effect on January 1. Former employees in these departments would set up their own companies and work for their old employers on contract basis.
Lyft stresses that it would have as many as 300,000 fewer drivers in California if it were required to classify drivers as employees because employee-drivers would be slated to work in scheduled shifts.
Labor activists celebrated the new law.
Correction 9/19, 8:15 p.m.: This article has been updated to clarify that AB5 will potentially give Uber and Lyft drivers the rights of an employee only if the companies are sued, and further explain the ABC test.
"While I personally disagree with this delay, I'm willing to allow the newspaper industry the additional year to comply if it means those delivery drivers and almost a million other misclassified workers are provided the minimum wage, benefits and workplace rights of Assembly Bill 5", Gonzalez said in a statement issued last week.
Drivers themselves are divided on the issue, with many lobbying in favor of the bill and others expressing concern about losing the ability to choose when they work.
Uber and Lyft, whose business models may be jeopardized by the law, said they would press on for a referendum that would overturn the measure, asking voters to approve a new system for independent workers with benefits.
But the state's Republican Caucus fired off a tweet contending that Newsom signed "California's largest anti-free market legislation" and that it could effect some two million jobs.
"Big thank you to all the gig workers, union members & activists who spent countless hours rallying to deliver this historic win", the California Labor Federal said in a tweet.
"We believe California is missing a real opportunity to lead the nation by improving the quality, security and dignity of independent work", Uber spokesman Davis White said.
In a statement, the San Diego assemblywoman said this law will make a major difference for workers who are misclassified as contractors to benefit an "illegal business model" and cut costs at the expense of workers.
The California Trucking Association and the Western States Trucking Association have spoken out against the bill, saying it will end the use of independent contractor truckers in the states.
The sweeping legislation exempts a variety of industries from following the stricter test, including doctors and dentists, licensed lawyers and engineers, commercial fisherman, travel agents and more. "But we will continue to defend our ability to enable on-demand, independent work", West said.
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