The California Senate has passed legislation that makes it more difficult to classify employees as independent contractors, according to the San Francisco Chronicle. The bill, AB5, goes back to the national assembly, where legislators have to approve new changes. When it comes into force, it will dramatically change gigantic companies, including Uber and Lyft.
If the bill approves the meeting, Governor Gavin Newsom will almost certainly sign it. On the day of work he registered The Sacramento bee that the misclassification of employees – where people are mistakenly toothed as independent contractors instead of employees – contributed to wealth inequality. "I am proud to be able to support assembly account 5, which extends critical labor protection to more employees by limiting incorrect classification," he wrote.
If the bill succeeds, employees from companies such as Uber, Lyft, DoorDash, Instacart and Postmates are likely to become employees on January 1, 2020. That also applies to some taxi drivers, translators and interpreters, and many others, according to The Chronicle. Trade unions have supported the bill.
The law extends a decision of the California Supreme Court that uses a formula, the ABC test, to determine whether an employee is an employee. The criteria are as follows: Employees whose duties are not performed under the company's control, perform work outside the company's main activity and have their own independent company in their field of expertise are contractors.
Supporters of the bill – such as Newsom and assembly member Lorena Gonzalez, who introduced it – say that companies mis-classify employees to avoid paying minimum wages and a range of benefits, such as employee compensation. Opponents, including companies that use journeys, say that the extra costs of employment will hit them hard.
Even if Newsom signs, that may not be the end of the fight. After unsuccessfully trying to be excluded from the bill, Uber, Lyft and other gig companies will try to win voters with a 2020 ballot to create a new classification for employees. "We are fully prepared to address this issue to California voters to maintain the freedom and access that administrators want and need," Lyft said in a statement.