Governor signs law on protections for Uber drivers, others

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California's new labor bill and its impact on the gig economy

Teamsters from local unions within Joint Councils 7 and 42 took part in multiple lobbying days in Sacramento in support of AB5, meeting with legislators.

AB5 is a bill that could one day give full employee status to gig workers from companies like Uber, Lyft, and DoorDash.

In a signing statement, Newsom called the bill "landmark legislation for workers and our economy".

The law challenges the business model of the rideshare platforms and others which depend on workers taking on "gigs" as independent contractors.

A spokesman for Lyft said it was hopeful the company could work with the governor's office to "reach a historic agreement", but added, "if necessary we are prepared to take this issue to the voters to preserve the freedom and access drivers and passengers want".

The bill would force companies like Uber and Lyft to classify workers as employees - instead of independent contractors.

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Should the latter become evident, the workers would be classified as employees who have a right to overtime, health insurance, and other protections. 5 itself creates more confusion - and that its drivers may still pass the test as independent contractors.

"Forget the specifics, more people should be considered employees because what has been happening is companies have been going out of their way to hire independent contractors to get out of those (employment law) obligations", he told reporters on September 9.

Newsom said Wednesday that he would convene labor, business and legislative leaders, to discuss how California could "support innovation and a more inclusive economy", by stepping in where the federal government had "fallen short", to grant workers the "right to organize and collectively bargain".

Los Angeles-based Sandra Alzate, a WSTA board member, told Reuters that she hires independent owner-operators when her customers have more work than her four-truck company can handle on its own.

"I think it's going to be very disruptive to the industry", said California Trucking Association CEO Shawn Yadon.

Backers called it one of the most significant changes in labor law in a generation. "We proved when working people stand together, we win!" He said he's looking forward to the benefits and pay guarantees promised under the new law. "It's also possible we'll see wages increase as a result".

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The new law implements a decision made previous year by the California Supreme Court regarding workers at the delivery company Dynamex. The company says it also offered paid sick leave and paid family leave for drivers who spend in excess of 20 hours per week in booked rides, though it did not specify what additional requirements would apply to drivers who elect to have injured worker and paid leave benefits.

The California Trucking Association's lawsuit argues that the Dynamex ruling should not be enforced because it is preempted under the supremacy clause of the U.S. Constitution. 5, which overwhelmingly passed the state Senate on September 10 and the Assembly on September 11.

"While I personally disagree with this delay, I'm willing to allow the newspaper industry the additional year to comply if it means those delivery drivers and almost a million other misclassified workers are provided the minimum wage, benefits and workplace rights of Assembly Bill 5", Gonzalez said in a statement issued last week.

But they're hedging their bets, too.

Correction 9/19, 8:15 p.m.: This article has been updated to clarify that AB5 will potentially give Uber and Lyft drivers the rights of an employee only if the companies are sued, and further explain the ABC test.

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