AB5, based on California’s Dynamex court decision, moves one step closer to law 


From the Los Angeles Times, Margot Roosevelt, Liam Dillon, and Johana Bhuiyan  report that the California bill that adopts the ABC test for classifying workers is moving towards passage in the California Assembly. They write:

A measure to curb the widespread use of independent contractors across the California economy moved closer to final passage in the Legislature on Friday even as Uber, Lyft and other gig economy companies mounted a fierce lobbying campaign to sidestep its reach.

The landmark legislation, which could set a precedent in a national battle to improve pay and benefits for low- and middle-wage workers, would change the employment status of more than a million Californians.

Janitors cleaning downtown office buildings, truckers loading goods at the ports of Los Angeles and Long Beach, construction workers building new homes, manicurists, medical technicians, nightclub strippers and even software coders would be among scores of occupations offered protection against long-documented workplace abuses.

Assembly Bill 5, which writes into law a strict test before companies can classify workers as contractors, cleared a key fiscal committee Friday in the state Senate. It is expected to pass both houses of the Legislature before lawmakers adjourn Sept. 13.

If that happens, Gov. Gavin Newsom is expected to sign the bill. “The governor is supportive of addressing the misclassification of workers, which for decades has been a driver of income inequality,” a Newsom spokesman said.

Hundreds of companies have faced lawsuits and government penalties for treating workers as independent contractors, a decades-long national trend that has impoverished wage earners, weakened labor unions and contributed to what experts call a fissured workplace between haves and have-nots.

Some 400,000 Californians are estimated to work either part-time or full-time for fast-growing platform-based technology companies, offering an array of services such as rides, food deliveries, household repairs and dog-walking.

App-based companies argue they offer a different employment model — innovative and flexible — and should thus be exempted from AB 5. They say that as contractors, their workers can set their own schedules and work for multiple companies. AB 5 could cost the firms millions of dollars, hindering future profitability.

Any such gig company carve-out is unlikely this year, but in an aggressive power play Uber, Lyft and DoorDash threatened Thursday to spend $90 million on a 2020 ballot measure unless the Legislature passes a new bill allowing them to avoid classifying drivers as employees.

The California Labor Federation, representing 1,200 unions with 2.1 million members, vowed to defeat the effort, which, if it materializes, could be one of the most expensive ballot measure campaigns in state history.

Newsom has indicated he may support gig companies’ proposal to create a special employment category for app-based drivers, and his staff has been negotiating the details with Uber and Lyft for months. “There’s been a lot of carve-outs in the [AB 5] legislation, so there has been a framework of compromise,” Newsom told reporters earlier this month.

In a letter this week, 75 law professors , economists and other academics urged Newsom and lawmakers not to exempt gig workers, writing that “California is poised to lead the country — indeed, to lead the world — with the strongest law on record to protect workers from misclassification.”

Contractors, including many in multibillion-dollar technology companies, are not covered by laws guaranteeing a minimum wage, overtime pay, sick leave, family leave, unemployment and disability insurance, workers’ compensation and protection against discrimination or sexual harassment.

State officials estimate California loses some $7 billion a year in payroll taxes due to misclassification. Nor do companies pay Social Security or Medicare taxes for contractors.

Read the full story at AB5, based on California’s Dynamex court decision, moves one step closer to law – Los Angeles Times

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