This month, California Governor Gavin Newsom signed a labor law that will change lives across the state. The new bill, AB5 will stop employee misclassification, primarily within rideshare companies like Uber and Lyft.
According to the LA Times, businesses will no longer be able to classify their workers as independent contractors to avoid paying them minimum wage, offering them sick time, and providing them with benefits. To qualify as an independent contractor, a worker must meet the following qualifications:
- The worker must be free from their employer’s control or direction,
- perform work outside of their hirer’s core business,
- and operate independently within an established trade, occupation, or business.
With these protections, a plumber or electrician will still be considered an independent contractor, but rideshare and delivery drivers will be reclassified as employees.
In his signing statement, Newsom wrote:
“The hollowing out of our middle-class has been 40 years in the making, and the need to create lasting economic security for our workforce demands action.”
In his opinion, and to the delight of many labor groups, AB5 is that action.
When Will the Bill go Into Effect?
AB5 will take effect on January 1, 2020. Workers in California will automatically be considered employees unless their employer can prove otherwise using the criteria outlined above.
Companies that depend on freelance or contract work will have to reevaluate their businesses or face legal consequences.
This may be the first step towards justice for rideshare drivers who struggle to make minimum wage while Uber’s CEO earns a $3 million salary, but independent contractors should expect litigation to be part of their reclassification efforts.
If you anticipate difficulties obtaining the benefits you’re entitled to, you’re not alone.