I N A JOLT to California’ s gig economic climate, the state’ s lawmakers authorized on September 11th a milestone bill, AB5, that will force numerous firms to classify independent companies as employees. California’ s chief excutive, Gavin Newsom, a Democrat, experienced pushed hard for the change. When he argued in a Labour Day op-ed in the Sacramento Bee , firms must no longer be permitted to “ shirk responsibility” and should dish out for things like medical benefits, joblessness insurance and paid sick times. The bill’ s sponsor, Democratic assemblywoman Lorena Gonzalez, has contended it will help workers, “ not Walls Street and their get-rich-quick IPOs”.
Whether that is genuine or not is fiercely debated. Companies that rely heavily on agreement workers argue that a requirement to deal with them as employees will place many out of work. The bill’ h authors seemingly admitted as much, placing dozens of exemptions for workers which includes accountants, architects, dentists, doctors, technical engineers and estate agents. Missing from the exemptions are drivers for ride-sharing companies like Uber and Lyft— considering that, the bill’ s authors claim, the ride-sharing platforms impose guidelines on their drivers which mean that they may not be truly self-employed.
Only “ a small fraction” of Lyft’ s roughly 325, 000 drivers in California keeps working if the law takes impact as expected on January 1st, states Adrian Durbin, head of plan communications for the San Francisco-based company. Some experts reckon ride costs could rise by as much as 30%. Requirement for trips could therefore slide. Beyond that, Lyft drivers will forfeit the ability to work, or not work, every time they want, Mr Durbin notes.
Unions such as Teamsters pushed hard for the legislation, which claims to make recruiting members easier. 1 big backer of the bill, the particular Service Employees International Union, reckons other states will follow suit. Per day before the bill passed, New York’ s governor, Andrew Cuomo, the Democrat, lauded California’ s force and said it got their “ competitive juices flowing”. Democrats running for president who have recommended California’ s bill include front-runners such as Kamala Harris, Bernie Sanders and Elizabeth Warren.
Lyft and Uber have lost approximately a third of their stockmarket values given that July but both are gearing up for battle. The firms at this point hope to strike an alternative deal with unions and lawmakers by offering motorists certain benefits including reimbursement for a few expenses and guaranteed earnings that will exceed the minimum wage. Ought to that fail, Uber, for its component, reckons it may still manage to maintain its drivers as contractors. Within a conference call following the bill’ h passage, Uber’ s top attorney, Tony West, said the idea would be to argue in court that the main business is being a technologies platform. That distinction could waive the requirement to treat drivers as workers.
A final option, each firms say, is to gather request signatures to kick-start a ballot initiative that would sidestep California’ ersus lawmakers. Last month Lyft plus Uber each put $30m right into a joint campaign fund for that hard work. “ If we need to, we’ lmost all take it to the voters, ” states Lyft’ s Mr Durbin. Above all has already begun to hire an advertising campaign team. ■