Legislature approves AB 5, bill heads to Gov. Newsom’s desk
SAN DIEGO (KUSI) – A San Diego lawmaker’s closely watched bill, which would limit when businesses and companies could classify employees as independent contractors, was passed by the state Legislature and is now on its way to the governor’s desk.
The state Senate voted 29-11 on Tuesday to approve Assembly Bill 5 and the Assembly voted 61-16 Wednesday to approve amendments to the bill, sending it to the desk of Gov. Gavin Newsom, who has indicated he plans to sign it.
The Assembly first approved the bill, one of the most high-profile in the state this year, in May.
AB 5 would codify worker protections and requirements established in last year’s state Supreme Court decision in the case of Dynamex Operations West Inc. v. Superior Court of Los Angeles.
Under the so-called ABC test required by the decision, workers could qualify as independent contractors if they are free from employer control or direction, engaged in an independent trade or profession and the work takes place outside the business’ normal scope.
“Today the legislature made it clear: we will not in good conscience allow free-riding businesses to profit off depriving millions of workers from basic employee rights that lead to a middle-class job,” said Assemblywoman Lorena Gonzalez, D-San Diego. “It’s our duty to look out for working men and women, not Wall Street and their get-rich-quick IPOs.”
The bill would reclassify thousands of California workers like Uber drivers and exotic dancers as employees rather than independent contractors.
A companion bill, AB 170, would offer a one-year exemption for newspaper distributors and carriers who are under contract with a publisher.
The bill is not eligible for a vote until Friday, when the legislature will go on recess for the end of the legislative year.
“While I personally disagree with this delay, I’m willing to allow the newspaper industry the additional year to comply if it means those delivery drivers and nearly a million other misclassified workers are provided the minimum wage, benefits and workplace rights of Assembly Bill 5,” Gonzalez said in a statement issued Tuesday night.
The bill is set to upend the gig economy in the state by offering labor rights and protections like unemployment insurance, health care subsidies, overtime pay and the ability to unionize to former independent contractors. A 2018 study by the Public Religion Research Institute found that 48% of gig economy workers in California deal with poverty.
The bill has drawn national attention due to support from three Democratic presidential candidates: Sens. Elizabeth Warren of Massachusetts, Bernie Sanders of Vermont, and Kamala Harris of California.
Companies like Lyft, Uber and DoorDash that have relied on thousands of independent contractors have said they plan to spend upwards of $90 million on a ballot initiative to overturn the bill. They have also argued that increased spending on employees will lead to higher fares for riders.
Certain industries like licensed insurance and real estate agents, cosmetologists, freelance journalists who complete fewer than 35 assignments for a single publication per year and commercial fishermen would be exempt from the reclassification, but workers for major ride-booking companies like Lyft and Uber would not be.
Uber Chief Legal Officer Tony West argued in a blog post that the company complies with the ABC test because “drivers’ work is outside the usual course of Uber’s business.”
“At Uber we embrace the challenge to improve work for drivers,” West said. “But we will continue to defend our ability to enable on-demand, independent work.”