California AB5: State Assembly passes employee misclassification bill

The state Assembly just passed a bill that could give Uber and Lyft drivers basic labor protections for the first time.California just took a major step in rewriting the rules of the gig economy.The state Assembly passed a bill Wednesday that would make it harder for companies to label workers as independent contractors instead of employees, a common practice that has allowed businesses to skirt state and federal labor laws. Uber would likely have to reclassify tens of thousands of drivers in California as employees — something Uber drivers have been fighting for in court, unsuccessfully, for years.“Big businesses shouldn’t be able to pass their costs onto taxpayers while depriving workers of the labor law protections they are rightfully entitled to,” San Diego Assembly member Lorena González wrote on Twitter after members voted overwhelmingly in favor of the bill she helped write.California businesses have been panicking over the possibility of the bill passing. The other 350,000 drivers who were part of the initial class-action lawsuit had signed mandatory arbitration agreements, so a federal judge is requiring them to pursue their cases in a private forum, where they are less likely to win their case.But it would be hard for Uber to pass the ABC test if the California bill becomes law; driving people around in cars is a central part of the company’s business.Any challenge to the drivers’ status as contractors threatens Uber’s bottom line, which is another reason the bill is so significantUber has been upfront with investors about the risk of a labor revolt. we would incur significant additional expenses for compensating Drivers, potentially including expenses associated with the application of wage and hour laws (including minimum wage, overtime, and meal and rest period requirements), employee benefits, social security contributions, taxes, and penalties.So it’s unsurprising that Uber is not happy about a law that would force the company to hire drivers as employees.As employees, gig workers would have a safety net for the first time ever.