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Following Passage of Assembly Bill 5, Attention Turns to Gig Companies


Readers will likely recall the long, hard fought struggle to get Assembly Bill 5 approved by the California Legislature and before Governor Gavin Newsome before the legislative session ended.  For supporters of Assembly Bill 5, that hard fought battle resulted in the measure reaching the Governor's desk and being signed into law.

Many are likely wondering what happens next.  Before we get there, let us take a step back and look at the big picture.  Assembly Bill 5 sought to codify the ABC test (created by the Dynamex v. Operations West, Inc. 2018 California Supreme Court case) in which workers in the state could be more easily classified as employees rather than independent contractors.  This meant that many gig companies, such as Uber & Lyft which classify their drivers as independent contractors rather than employees, were at risk of having their workers potentially re-classified as employees which would open a host of "issues" for these companies.  (I use the word "issues" loosely here as if these workers were re-classified as employees, they would be entitled to paid time off, sick leave, an increase in pay, etc. which would impact the bottom line and business models of these gig companies.)  Now just because Assembly Bill 5 was signed into law does not mean that those workers at gig companies would immediately become employees.  Quite the opposite.  Rather, once the law takes effect next year, it will be easier for these workers to establish that they are actually employees rather than independent contractors (as the ABC test is more favorable to establishing these workers are actually employees.)

With the passage of Assembly Bill 5, it is expected that over 1 million workers in the state will be impacted.  Nevertheless, the gig companies have sought ways to skirt the scope of the new law.  Those efforts include trying to negotiate a compromise with lawmakers and threatening to put the matter before voters to decide.

Now the legislation is not set to take effect until January 1st of next year so there is still some time for the gig companies to get their ducks in a row.  I would expect there will be legal challenges filed to the validity and enforceability of the law.  Stay tuned.  This fight is likely far from over.


For additional information:  https://gizmodo.com/ab5-landmark-bill-protecting-gig-workers-in-california-1838222549

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