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California just disrupted the gig economy.
Senate lawmakers passed a controversial bill, known as AB 5, on Tuesday evening, after months of uproar from businesses and gig companies like Uber and Lyft. The bill will require businesses to hire workers as employees, not independent contractors, with some exceptions. That will give hundreds of thousands of California workers basic labor rights for the first time.
And despite an aggressive lobbying campaign, Uber and Lyft are not exempt.
Lawmakers voted 29-11 in favor of AB 5, and now the bill heads back to the state assembly for lawmakers to vote on amendments to the bill. Then it heads to Gov. Gavin Newsom for his signature. He has signaled that he will sign it.
“This is a victory to savor,” tweeted Nicole Moore, an Uber driver and organizer with Rideshare Drivers United.
The new law will crack down on a business model championed and cherished by Silicon Valley — a striking turn of events for the celebrated tech industry. Uber, Lyft, and other app-based gig companies rely on hundreds of thousands of independent contractors to give rides, deliver food, and complete other tasks.
Reclassifying them as employees would change everything.
Gig workers would get labor protections and benefits that all employees get, such as unemployment insurance, health care subsidies, paid parental leave, overtime pay, workers’ compensation, paid rest breaks, and a guaranteed $12 minimum hourly wage. And, perhaps more importantly, they could unionize.
