California Landmark Law Forces Gig Companies to Reclassify Workers
California's governor signs AB5, a groundbreaking law that requires gig economy companies like Uber and Lyft to treat their workers as employees rather than independent contractors.
California Gov. Gavin Newsom signs a sweeping labor law that extends wage and benefit protections to about a million gig economy workers. The legislation, known as AB5, targets ride-hailing companies like Uber and Lyft by preventing them from classifying their drivers as independent contractors. Under this new law, these workers gain access to basic benefits such as minimum wage, paid sick days, and health insurance.
The bill applies to workers across various industries, including health care, trucking, and media, though it includes specific exemptions for real estate, commercial fishing, and cosmetology. App-based tech companies heavily rely on the independent contractor model and do not receive any exemptions from this legislation. Democratic Assemblywoman Lorena Gonzalez, the author of the bill, states that California is setting a global standard for worker protections.
Uber, Lyft, and DoorDash strongly oppose the new regulations and refuse to reclassify their drivers as employees when the law takes effect on January 1, 2020. Instead, these gig economy giants plan to spend $90 million on a 2020 ballot measure to create their own set of regulations for gig workers. Both labor groups and the tech companies anticipate that this legislative battle in California will have significant national implications for the future of work.