California’s Assembly Bill 5 (AB5) will reclassify many contract workers in California into full employees with benefits. It doesn’t cover all types of contract workers, and is anticipated to affect companies like Uber and Lyft the most.
The New York Times reported that AB5 passed the California State Senate in a 29 to 11 vote. California’s Governor, Gavin Newsom, endorsed the bill this month and is expected to sign it. If signed, the measure will go into effect on January 1, 2020. State Senator Maria Elena Durazo (Democrat – Los Angeles) authored the bill.
The bill redefines “employee” using an existing law that includes an “ABC” test to establish whether a worker is an independent contractor or an employee. It says a worker is an employee if the worker’s tasks are performed under a company’s control; those tasks are central to that company’s business; and the worker does not have an independent enterprise in that trade.
Those who are considered employees under this bill will have access to basic protections such as a minimum wage, unemployment insurance, and perhaps access to health insurance coverage.
Personally, I am an independent contract worker – not an employee. None of the work I do for a living could be considered “central to that company’s business”. That said, people who are part of the gig economy and who drive for companies who produce ride-hailing apps, could be considered employees. They are doing the work that is central to the the business of Uber, Lyft, and DoorDash.
According to The New York Times, Uber and Lyft have “repeatedly warned that they will have to start scheduling drivers in advance if they are employees, reducing drivers’ ability to work when and where they want”. But, this is nonsense. There is absolutely nothing in AB5 that requires companies to “schedule drivers in advance”. It is possible that Uber and/or Lyft will retaliate by raising the prices for rides – but this will ultimately backfire because public transit is always going to be less expensive.
There are lists of professions who are exempt from AB5. Those professions include: doctors, dentists, psychologists, insurance agents, stockbrokers, lawyers, accountants, engineers, direct sellers, real estate agents, hairstylists, commercial fisherman, travel agents, and graphic designers.