In a landmark move aiming to combat worker misclassification, California Governor Gavin Newsom signed a bill into law Wednesday that will potentially give independently contracted local workers such as Postmates and Lyft drivers the same rights as full-time employees of the companies for which they work.
In brief: After years of effort on the part of "gig" drivers working for Uber, Lyft, or other such services, they might have finally earned themselves a win: starting January 1, 2020, a new law could allow many independent contractors to be classified as employees instead of contractors.
AB 5 is set to upend the gig economy in the state by offering labor rights and protections like unemployment insurance, health care subsidies, overtime pay and the ability to unionize to former independent contractors.
The bill was one of the most hotly debated by the Legislature this year, legislation that began as a way to clarify state law following a 2018 ruling by the California Supreme Court that found a number of workers across the state should be considered employees of a business who are entitled to various benefits.
Uber, Lyft and DoorDash have already committed a combined $US90 ($132) million toward opposing AB5 - now its implementation rather than the bill's passage - and Uber has floated the idea of a ballot initiative to attempt to undermine the law.
The two ride-sharing companies strongly opposed the legislation.
Drivers themselves are divided on the issue, with many lobbying in favor of the bill and others expressing concern about losing the ability to choose when they work.
Those in the most prominent industry left out of those final changes to the bill, California's app-based technology sector, insisted they would continue to seek exemptions from any new mandate to classify workers as employees.
However, the Owner-Operator Independent Drivers Association takes a more wait-and-see attitude regarding how the new law will affect trucking.
"At Uber we embrace the challenge to improve work for drivers".
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.
"We've engaged in good faith with the Legislature, the Newsom administration and labor leaders for almost 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", the Uber spokesperson said.
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.
Several occupations are, by default, exempt from AB5, including "direct sales salespersons", real estate licensees, commercial fisherman, insurance agents, and others. Separate legislation introduced last week also exempted newspaper carriers for one year.
Uber's top lawyer, Tony West, said last week that the company would continue classifying its drivers as independent contractors if the labor bill passed.