California’s governor - Gavin Newsom - has endorsed a landmark bill that requires companies like Uber, Lyft, Postmates and Amazon Flex to treat contract workers as employees, paying holiday and sick pay to the workers.
The bill was passed in the state Senate and despite their efforts to negotiate an exemption, will apply to app-based companies. It is expected to be signed into law, paving the way for California's 1 million gig workers to gain added rights next year.
Assemblywoman Lorena Gonzalez - who introduced the bill - said in a statement:
“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. This legislation is an important work in progress to provide certainty to California’s businesses, provide protections for California’s workers and guard the taxpayers from subsidizing unscrupulous corporations.”
If the bill is signed into law it could reshape the gig economy - which has been a cornerstone of the model adopted by ride-hailing firms and food delivery apps - with some estimates suggesting that costs for firms affected would increase by 30% if they have to treat workers as employees.
Opponents of the bill say it will hurt those people who want to work flexible hours but California state senator, Maria Elena Durazo, remarked that underpaying workers was not innovative.
An Uber spokesperson, in a statement, said:
"We support efforts to modernize labor laws in ways that preserve the flexibility drivers tell us they value, while improving the quality and security of independent work.”
Uber and Lyft have both proposed a referendum on the decision and in a statement after the bill was passed, a Lyft spokesperson said:
"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 and Lyft - who have hundreds of thousands of drivers in California - have said that contract work provides people with adaptability and will hurt those people who want to work flexible hours. They have also warned that recognizing drivers as employees could destroy their businesses.
Other states may be influenced by this bill as a coalition of labor groups is pushing for similar legislation in New York. New York City passed a minimum wage for ride-hailing drivers last year - but did not try to classify them as employees. In Washington State and Oregon similar bills were introduced but failed to advance. However, this bill could see them renewing impetus.
Previously, California has led the way in introducing legislation that has been adopted elsewhere in the US. This has worried the Western States Trucking Association - which represents truck drivers - many of whom are temporary and freelance workers.
Joseph Rajkovacz - Group Director of Governmental Affairs - told Reuters:
“People ought to be very concerned because what happens here does tend to get copied in other states."
Alex Rosenblat - a technology ethnographer at Data & Society and author of Uberland - thinks the bill is likely to pass in California’s Democratic-majority Senate and says:
“They are setting a powerful political example for how to regulate tech and try and create better conditions under which people work in the gig economy. And that’s pretty important.”
