California Gov. Newsom signs law reclassifying some gig economy workers


Gavin Newsom on September 18 signed Assembly Bill 5 into law, a measure that trucking interests in the state say will wipe out the ability to use owner-operators.

After the state Legislature passed the bill last week to send it to the governor's desk, Uber chief legal officer Tony West said the company was disappointed it couldn't reach a compromise with lawmakers and said a majority of their drivers prefer to stay as independent contractors.

"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.

Companies like Lyft, Uber and DoorDash that have relied on thousands of independent contractors have said they plan to spend upwards of $90 million combined on a ballot initiative to overturn the law.

"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. Meanwhile, it would significantly increase operational costs for the so-called sharing economy companies.

In negotiations, Lyft says it offered drivers alternatives to AB5.

"I'm going to lose clients because I can't provide the trucks they need for their jobs", she said, adding she had already planned to invest $400,000 on two truck upgrades and cannot afford to hire additional drivers or buy additional rigs.

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"Assembly Bill 5 is a landmark legislation for workers and our economy", Newsome wrote this afternoon. Further, if the likes of Uber are forced to classify many of its drivers as employees, they could attempt to pass the costs on to consumers.

If Newsom's words upon signing the bill are any indication of the future of gig economy-related legislation in blue states, the days of widespread contractor labor for tech companies whose core businesses would appear to depend on it may be ending.

Labor activists celebrated the new law. He said he's looking forward to the benefits and pay guarantees promised under the new law. "Our fight continues. We ask the state of California to enforce AB 5 in order to protect workers", driver group Gig Workers Rising wrote in a statement.

Amusing 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.

In addition, it gives newspaper companies a one-year delay to figure out how to apply to the law to newspaper carriers, who work as independent contractors.

".several previous rulings have found that drivers' work is outside the usual course of Uber's business, which is serving as a technology platform for several different types of digital marketplaces", an excerpt from West's full statement reads. He pledged to "convene leaders from the Legislature, the labor movement and the business community to support innovation and a more inclusive economy".

Several occupations are, by default, exempt from AB5, including "direct sales salespersons", real estate licensees, commercial fisherman, insurance agents, and others.