Gig Economy Bill Becomes Law, Much To Uber And Lyft’s Chagrin

Uber, Lyft, and Doordash have already spent $90 million on a potential 2020 ballot measure aimed at undoing AB 5.

California has an official law on the books to protect gig economy workers, roughly a decade after the gig economy emerged.  

Gov. Gavin Newsom signed Assembly Bill 5 on Wednesday, setting stricter standards on worker classifications. The bill was approved last week after several months of steep debate between tech companies, Uber and Lyft drivers pushing for worker protections, and some gig workers who preferred the independent status.

“The hollowing out of our middle class has been 40 years in the making,” Newsom said in a statement, “and the need to create lasting economic security for our workforce demands action.”

AB 5 establishes an “ABC test” to prove if contractors are doing work outside the company’s usual business, not contributing to the core part of it. Should the latter become evident, the workers would be classified as employees who have a right to overtime, health insurance, and other protections. Further, it empowers city attorneys like San Francisco’s Dennis Herrera to enforce these standards by suing over violations. 

“It’s about time Uber, Lyft, DoorDash and other companies face strong local enforcement when flouting labor law,” Lauren Casey of Gig Workers Rising told the Examiner upon the bill’s passage.

Unsurprisingly, platforms that rely on this independent status immediately announced they would continue to push back. Uber, Lyft, and DoorDash already have $90 million contributed to a campaign committee dedicated to undoing AB 5 through a 2020 ballot measure.

“We’ve engaged in good faith with the Legislature, the Newsom administration and labor leaders for nearly a year on this issue, and we believe California is missing a real opportunity to lead the nation by improving the quality, security, and dignity of independent work,” wrote Tony West, Uber’s chief legal officer, after AB 5 passed.

Funny enough, the bill was born out of a 2018 California Supreme Court ruling, referred to as Dynamex, that came from truck drivers before companies like Uber even existed. The ruling restricted the use of independent contractor and immediately sent ripples through the world of labor relations as legislators sought to codify it.

Newsom called AB 5 an important step but that the next steps involving ways for workers not covered by the National Labor Relations Act to unionize and collectively bargain.

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