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California Passes Remarkable Bill to Reorient Gig Economy



SACRAMENTO – California lawmakers on Tuesday approved a major bill requiring companies like Uber and Lyft to treat contractual employees as a move that could reverse the gig economy and add fuel to the longstanding debate over whether nature at work there are getting too insecure.

The bill was passed by 29 to 11 votes in the state Senate and will apply to application-based companies despite their efforts to negotiate an exemption. California Gov. Gavin Newsome approved the bill this month and is expected to sign it after passing through the State Assembly, expected to be a formality. Under the measure, which will take effect on January 1

, workers must be designated as employees instead of contractors if the company exercises control over the way they perform their tasks or if their work is part of the company's regular business.

The bill may affect other conditions. A coalition of labor groups has been pushing for similar legislation in New York, and bills in Washington and Oregon that were similar to those in California but failed to make progress could gain momentum. Last year, New York accepted a minimum wage for drivers, but did not try to classify them as employees.

In California, the legislation will affect at least one million workers by the end of the decade – a long trend of outsourcing and franchising that makes employer-employee relationships longer. Many people were pressured into contractor status without access to basic protections such as minimum wage and unemployment. Ride drivers, food delivery couriers, porters, nail salon workers, construction workers and franchise owners can now be retrained as employees.

But the passage of a bill that codifies and extends the California Supreme Court's decision in 2018 threatens concert companies such as Uber and Lyft. Fishing companies – along with application-based services that offer food delivery, home repair and dog walking – have built their businesses on cheap and independent work. Uber and Lyft, which have hundreds of thousands of drivers in California, said contracting provides people with flexibility. They warned that recognizing drivers as employees could destroy their businesses.

"There will be great reviews across the country," says David Weil, a senior Labor Department official during the Obama administration and author of a so-called book. called bursting in the workplace. He argues that the bill could put a new bar on worker protection and force business owners to rethink their reliance on contractors.

California lawmakers say the bill, known as Assembly Bill 5 and proposed by Lorenzo Gonzalez's Democratic Party,

Social Security or Medicare, "said State Senator Maria Elena Duraso, a Democrat. "Let's be clear: there is nothing innovative about paying someone for their labor."

She added, "Today we are determining the future of the California economy."

Motorcycle riders welcomed the passage of the bill. "I am so proud of shared car drivers who have taken the time of their lives to share their stories, stand up, talk to legislators, and hope they take some time to secure a victory," he said Rebecca Stack-Martinez, driver and organizer with Gig Workers Rising.

Uber did not immediately get a comment until Lyft said it was disappointed. "Today, our country's political leadership has missed an important opportunity to support the majority of shared drivers who want a thoughtful solution that balances flexibility with the standard of income and benefits," says Lyft spokesman Adrian Durbin.

Gig-type work has been under the spotlight for years, as companies such as Uber, Lyft and DoorDash in the United States – as well as Didi Chuxing in China and Ola in India – have grown into behemoths, even as contractors, at who relied on did not receive benefits or a minimum wage guaranteed to employees. Many companies have worked diligently to overcome their efforts to classify employees as employees, settling driving lawsuits and providing exceptions to rules that could jeopardize the status of freelance drivers.

While regulators in California and at least three other states – New York, Alaska and Oregon – have found that riders traveling by state are employees under state laws for narrow purposes, such as eligibility for unemployment insurance, these findings could be abolished by state laws that explicitly regard drivers as contractors. About half of the states in the nation have adopted such regulations.

But recently the tide has begun to change. Two federal proposals introduced since 2018 seek to redefine the way workers are classified to allow more of them to come together. These proposals have received support from candidates for the Democratic presidential nomination, including Senators Kamala Harris, Bernie Sanders and Elizabeth Warren. Presidential hopes also gave their approval to the California bill.

In the United Kingdom, Uber appeals against a labor tribunal decision requiring drivers to be classified as workers entitled to a minimum wage and vacation. The country's Supreme Court is expected to hear arguments in the case next year.

"Some forms of compensation for part of the driver's population seem inevitable," says Lloyd Walmsley, a equity analyst at Deutsche Bank who monitors the vehicle industry.

A critical question is how concert companies will respond to California's new law. Industry officials have estimated that they should rely on employees rather than contractors to increase costs by 20 to 30 percent.

Uber and Lyft have repeatedly warned that they will have to start pre-planning for drivers if they are employees, reducing drivers' ability to

experts say there is nothing in the bill that requires employees to work shifts and that Uber and Lyft have a legal right to continue to allow drivers to make their own planning decisions.

In practice, Uber and Lyft may choose to limit the number of drivers who can work in slow hours or in less crowded markets where drivers may not generate enough in tariffs to justify their wage costs as employees. This can lead to a reduced need for drivers for everyone.

But Veina Dubal, a professor at the University of California, Hulls, California, said it would still be advantageous for Uber and Lyft to rely on incentives as a bonus payment to ensure they have enough drivers on the road to get they adapt to customer demand much more agile than if they pre-planned drivers.

"It doesn't make sense to them" to drastically limit flexibility, she said.

Some companies are not struggling with the bill. Uber, Lyft, and DoorDash pledged to spend $ 90 million in support of a ballot initiative that would essentially exempt them from the legislation. Uber also said it would collect misclassification requests from drivers into arbitration and press lawmakers to consider a separate bill that could exempt them from A.B. Impact of 5 when the legislative session begins in January.

California cities will have ways to enforce the new law. Last-minute changes to the measure gave lawmakers the right to big cities to sue companies that did not comply.

The bill was not widely supported by drivers. Some objected because they worried it would be difficult to keep a flexible schedule. After Uber and Lyft sent messages to drivers and motorcyclists in California in August asking them to contact lawmakers on behalf of companies, lawmakers said they had noticed a jump in calls.


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