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What Did California Just Do to the Gig Economy?
A new law could mean companies like Lyft and Uber have to change their business models
Late Tuesday evening, the California state legislature approved a bill that would make it more difficult to classify workers as independent contractors. Its passage followed a long negotiation with on-demand app makers like Lyft, Uber, and Doordash, who have said that classifying their on-the-ground workers as employees would fundamentally change their business models. Uber and Lyft sought an amendment to the bill that would essentially exempt them from the law — they didn’t get one.
California governor Gavin Newsom has already pledged his support for AB 5 in a Sacramento Bee op-ed, and is expected to sign it into law. Here’s what you need to know.
Why is this even important?
United States law classifies almost all workers into two main buckets: employees and independent contractors. If you get placed in the first bucket, you’re protected by labor laws that guarantee you a minimum wage, overtime, and some benefits, like workers compensation and unemployment insurance. If you get placed in the second bucket, you don’t.
