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September 11, 2019

Gig worker bill, AB5, passes California State Senate

Assembly Bill 5, the gig worker bill opposed by the likes of Uber, Lyft and DoorDash, has passed in the California State Senate. This comes shortly after California Governor Gavin Newsom officially put his support behind AB 5 in an op-ed.

AB5 would ensure gig economy workers are entitled to minimum wage, workers’ compensation and other benefits.

The state Senate passed the bill in a 29 to 11 vote this evening. The state Assembly, which previously approved the legislation, will now vote on amendments to AB5. If the Assembly passes the legislation, which it is expected to, it will go to Gov. Newsom who has expressed support for the measure.

“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,” Lyft spokesperson Adrian Durbin said in a statement. “The fact that there were more than 50 industries carved out of AB5 is very telling. We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need.”

Assuming Gov. Newsom signs the bill, it will go into effect Jan. 1, 2020.

“AB5 is only the beginning,” Gig Workers Rising member and driver Edan Alva said in a statement. “I talk daily to other drivers who want a change but they are scared. They don’t want to lose their only source of income. But just because someone really needs to work does not mean that their rights as a worker should be stepped all over. That is why a union is critical. It simply won’t work without it.”

The bill, first introduced in December 2018, aims to codfiy the ruling established in Dynamex Operations West, Inc. v Superior Court of Los Angeles. In that case, the court applied the ABC test and decided Dynamex wrongfully classified its workers as independent contractors based on the presumption that “a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits…”

Those who work as 1099 contractors can set their own schedules, and decide when, where and how much they want to work. For employers, bringing on 1099 contractors means they can avoid paying payroll taxes, overtime pay, benefits and workers’ compensation.

According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove the worker is free from the control and direction of the hiring entity, performs work outside the scope of the entity’s business and is regularly engaged in an “independently established trade, occupation, or business of the same nature as the work performed.”

Uber and Lyft, two of the main targets of this legislation, are adamantly against it. Last month, Uber, Lyft and DoorDash amped up their efforts to do whatever they can to prevent it from happening. That’s in part due to the fact that the companies cost of operating would increase.

“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,” a Lyft spokesperson wrote in an emailed statement. “The fact that there were more than 50 industries carved out of AB5 is very telling. We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need.”

Uber, Lyft and DoorDash each put $30 million toward funding a 2020 ballot initiative that would enable them to keep their drivers as independent contractors.

Correction: AB5 must head back to the state Assembly for a vote on Senate amendments. TechCrunch has corrected the headline and article to reflect this. We’ve also updated this story with comment from Lyft.


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