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The California Assembly passed legislation on Wednesday that could have a profound effect on hundreds of thousands of workers by requiring companies like Uber, Postmates, Amazon Flex, and others to recognize much of their workforce as employees entitled to labor protections and benefits. The proposed law cuts to the heart of one of Silicon Valley’s fiercest debates at the moment: Should tech giants be allowed to classify the legions of gig-economy workers their companies rely on as independent contractors, or should they be forced to regard them as employees, and compensate them as such?
Lawmakers in California appear to be overwhelmingly in favor of the latter. Less than a month after ride-hail drivers around the globe briefly went on strike on the eve of Uber’s IPO to protest low wages and their status as contractors, the bill was approved 53 to 11. It now moves to the state Senate.
Other states and cities have previously attempted to regulate gig-economy work, with proposals often targeted at a single industry. Last year, for example, New York City imposed a mandatory minimum wage and temporary cap on ride-hail drivers. California’s legislation is notable in its scope, which goes far beyond the tech economy.
“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,” Assemblywoman Lorena Gonzalez, who introduced the bill, said in a statement. “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 signed into law, the legislation will codify a landmark April 2018 California Supreme Court ruling, which introduced a three-part test to determine which workers businesses can reasonably classify as independent contractors and which must be treated as genuine employees. Workers considered employees are entitled to key labor protections and benefits—such as a minimum wage, overtime pay, and protections under antidiscrimination laws—which many gig-economy companies have long resisted.
To designate workers as independent contractors under the bill, companies will have to prove the following: that they don’t control or direct the person’s work; that the worker’s services aren’t related to the company’s main business; and that the person is engaged in an “independently established trade, occupation, or business of the same nature” as the work performed.
Uber and Lyft drivers would “pretty clearly fit as employees under this statute,” says Alex Rosenblat, a technology ethnographer at Data & Society, and author of Uberland. The bill could also affect the workers powering popular delivery apps like Postmates and Grubhub; child and pet care services like Care.com and Wag; and on-demand fulfillment operations like Amazon Flex.
Rosenblat thinks the bill is likely to pass in California’s Democratic-majority Senate, especially given the popular backlash to large tech companies. She says the legislation’s reclassification of workers could have a major impact on gig-economy firms’ already meager bottom lines, along with the way lawmakers around the country think about addressing tech workers’ rights.
“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,” she says. “And that’s pretty important.”
In a statement, an Uber spokesperson 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.” Lyft did not respond to requests for comment.
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