Uber, Lyft and DoorDash have said they will spend $90 million to back a ballot referendum in 2020 aimed at exempting them from the proposed law. (Photo: Shutterstock)
Gig workers in California will get a boost from AB5, a new bill passed by the California Senate and backed by Governor Gavin Newsom that will make it tougher for companies to classify them as independent contractors instead of as employees.
A Reuters report says that ride-hailing companies like Uber and Lyft will feel the brunt of the legislation, which "would codify a 2018 California Supreme Court decision, Dynamex Operations West Inc v. Superior Court, that set out a new standard for determining whether workers are properly classified as independent contractors." The court decision found that state wage laws cover workers as employees when the company controls their work or when they are integral to its business.
Related: What employers should know about California's proposed worker classification bill
Uber, Lyft and DoorDash have said they will spend $90 million to back a ballot referendum in 2020 aimed at exempting them from the law, which would have far broader reach than just California due in part to the state's large population and workforce.
"By approving AB5, the California legislature solidified our state's position as the national leader on workplace rights, setting the standard for the rest of the country to follow," the California Labor Federation said in a statement, while Lyft issued a statement saying, "We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need."
The legislation, which passed the Senate in a 29–11 vote, still has to go back to the Assembly for a "concurrence vote," expected to happen by the end of the week, and Newsom has said he will sign it. It also has broad support outside the state, from several Democratic presidential candidates including Sens. Elizabeth Warren, D-MA, Bernie Sanders, I-VT and Kamala Harris, D-CA.
Businesses dependent on so-called gig workers are firmly opposed to such a measure since it could end up completely transforming their business models by providing employee status—and pay and benefits—to workers currently classed as independent contractors.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
