Category: Discrimination

Independent contractors make up about 10 percent of all American workers. This is a popular choice for many companies because of the benefits to the company itself.

One appeal of hiring a contractor is that companies are able to pay independent contractors lower wages. The positions usually do not come with benefits and employers are not required to follow the same rules. Independent contractor status also prevents these workers from joining labor unions.

Assembly Bill 5

Recently, a new California law was passed by state Congress, which will require companies to classify all workers as employees rather than independent contractors.

This may improve pay and benefits for workers on the lower end of the earning spectrum. The law is expected to help set a precedent for the United States as a whole when it comes to fair minimum wages.

Similar bills have been proposed in other states such as New York and Oregon. However, proposed legislation in other states has failed to get as much traction as this California law.

The new California law, known as Assembly Bill 5, must still be signed into law by California Governor Gavin Newsom. It requires companies to treat their independent contractors as employees.

This includes:

This bill was proposed by Lorena Gonzalez, a Democrat Assemblywoman. She is working toward a better future for all workers, stating, “Let’s be clear: there is nothing innovative about underpaying someone for their labor.”

What Types of Workers Will Be Affected By This Law?

Assembly Bill 5 is expected to affect over one million California workers. This figure includes 400,000 Californians who currently work for platform-based technology companies. It may also apply to contract workers involved in:

  • Rideshare programs like Lyft and Uber,
  • Food delivery,
  • Dog-walking and pet-sitting,
  • Household repairs, and
  • Cleaning services.

Many of these companies argue that they should be exempt from this law since their employment model is more flexible. They argue that they allow workers to set their own schedules and work at their own pace. However, it seems that the new law will affect all companies equally.

Opposition to Assembly Bill 5

Several platform-based companies are opposing the bill, claiming they are exempt from its reach. Lyft has publicly voiced the company’s disappointment. One of Lyft’s spokesmen, Adrian Durbin, stated: “Today, our state’s political leadership missed an important opportunity to support the overwhelming majority of rideshare drivers who want a thoughtful solution that balances flexibility with an earnings standard and benefits.”

Uber has also made it clear that the company would continue to oppose this new law when Tony West, Uber’s chief legal officer, spoke with reporters. “Uber is no stranger to legal battles,” he stated. “We operate in a very regulated environment, and we recognize that there will be legal challenges on all fronts much of the time.”

It does not seem like companies that oppose Assembly Bill 5 will be backing down anytime soon. The rideshare companies have proposed a higher minimum hourly wage for Californian drivers, offering $21.00 per hour. Other companies, including DoorDash, have promised $90 million on a new ballot initiative for the 2020 election to allow these companies to be exempt from following this new law.

Despite this opposition, Assembly Bill 5 passed in the state Assembly with a wide margin –  56-15. It was sent to Gov. Newson’s desk to be signed into law. Governor Newsom has stated that he is decidedly supportive of this bill. However, he may be willing to negotiate with these platform-based companies. The governor has been involved in discussions with these companies, including Uber and Lyft, and seems hopeful to find a negotiation which benefits all parties.

The Beginning of a Trend?

With the success of this California law, there will likely be a push in other states to pass similar legislation. In states such as New York and Oregon, where there have been attempts to pass these types of laws in the past without success, there may be new initiative following this win in California.

The passing of Assembly Bill 5 brought greater protections and benefits to over one million workers in California. It has also managed to bring the issue of the rights of workers who work for these types of platform-based companies to the national stage.