There will be no deal for gig companies such as Uber and Lyft in the California Legislature this year.
They’ve been seeking a way to keep their workers classified as contractors instead of employees. But legislation to address worker misclassification moved forward Tuesday night with exemptions for other industries — but not them.
AB 5 by Asm. Lorena Gonzalez (D-San Diego) codifies last year’s California Supreme Court ruling that set a new test for when a worker is an employee.
When the bill came up in the Senate last night, Sen. Bob Archuleta (D-Pico Rivera) said it’s about time.
“An honest business cannot compete with businesses that don’t pay minimum wage, workers’ compensation or payroll taxes,” Archuleta said.
But the bill exempts a wide range of industries — including doctors, lawyers and hairstylists. And last night, hours ahead of the deadline for final amendments, the bill’s author rewrote a separate measure to carve out newspaper delivery workers.
Many senators — even supporters like Sen. Steve Glazer (D-Orinda) — criticized the picking of winners and losers.
“We should be writing smart, broad-based rules that protect California workers from exploitation, while giving people the freedom to control their own hours, pay and work product if they wish to do so,” Glazer said.
Among those left out of the bill was the trucking industry.
“So I plead with you — give us some grace," said Sen. Brian Dahle (R-Bieber), who owns a trucking business. “Give us a break. Cause we’re struggling, and it is difficult.”
And then, there are the gig companies like Lyft, Uber and DoorDash. They’re seeking a way to keep their workers as contractors while offering income floors and certain benefits. And they’ve pledged to spend a combined $90 million on a ballot measure next year if they don’t reach a deal in the Legislature.
In a statement after #AB5 passed the Senate, @lyft said lawmakers "missed an important opportunity" and says it is "fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need."— Ben Adler (@adlerben) September 11, 2019
That could yet happen next year. For now, AB 5 returns to the Assembly for a final vote as soon as Wednesday, after sucking up more time, energy and lobbying than perhaps any other bill this year.
Contractor or Employee?
The legislation came in response to a 2018 California Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court of Los Angeles, which established a new test for classifying workers.
The decision raised concerns in industries that traditionally rely on independent contractors. Some earned early exemptions in AB 5, including hairstylists, attorneys and accountants. Others, like psychologists and podiatrists, were added after months of lobbying.
The trucking industry emerged as one of the bill’s loudest opponents — sometimes literally. Several demonstrations in recent weeks involved big rigs circling the Capitol, blaring their air horns. Gonzalez included a small carveout for construction truckers, but not the rest of the industry. Trucking groups have filed suit in federal court to avoid the new requirements under the state Supreme Court decision.
Uber and Lyft have an estimated 220,000 drivers in California, who are currently classified as contractors.
Gig companies say flexibility is essential to their platforms, but their argument failed to persuade Gonzalez. They had proposed creating a third classification of worker — which would have the flexibility of a contractor and certain benefits and protections of an employee. But the proposal gained little traction.