Since California Governor Gavin Newsom has signed a sweeping new labor law, wages and benefit protections have been extended to millions of workers, with its aim primarily at drivers who are under contract with ride-hailing companies such as Uber and Lyft. In his argument, Newsom said that the misclassification of these workers as independent contractors and not employees is causing them to lose basic benefits. These include paid sick leave, basic wages, health insurance, etc.
According to him, this entire system of hollowing out the middle class has been coming on for most of the last half century. It is now that the workforce must rise and demand action. Newsom believes that this move will change the status quo and help the middle class change the shape of the future for workers. Lorena Gonzalez of San Diego, a Democratic Assemblywoman and the author if the bill being dubbed the AB5, said that California is one of the largest economies in the nation, and with its new standards for global worker protections, other countries and states should be able to follow a great example of how to treat the workforce.
National implications of the AB5 are soon to hit Uber and Lyft.
This bill includes all workers in a number of employments and industries such as healthcare, media, and truckers. Real estate, commercial fisheries, cosmetology, and some other employments are within the exceptions of the law. Application-based and tech companies such as Doordash, Postmates, Uber and Lyft were not given exemption status and Uber claims to not be satisfied with the reclassification of drivers to employees.
The three companies which rely on contractual driver services have vowed to have a 2020 ballot measure for the regulation of the gig economy workers in a move that may cost over $90 million. Tony West, the chief legal officer, said in a statement that came out before the bill was signed that the company has been engaging with the legislature and Newsom Administration along with the labor leaders for almost one year now. His belief is that California is missing out on an opportunity to lead the nation through improved work standards and securing dignity for independent workers.
Newsom mentioned when signing the law, that he is prepared to undergo negotiations with the labor and businesses. The next step for him is to create unions for the workers to be able to collectively bargain and increase their earning standards along with having a strong voice at work. The move should preserve flexibility and innovation in the industry.