California lawmakers approved a bill that would require companies like Uber and Lyft to treat gig workers as employees, The New York Times reports.
The California state Senate approved the bill, which would require companies to treat contract workers as employees, in a 29-11 vote. The bill will apply to companies like Uber and Lyft, despite a strong effort to negotiate an exemption.
The bill is expected to skate through the state Assembly and Governor Gavin Newsom is expected to sign the bill into law after endorsing it earlier this month.
Once approved, the bill states that companies must designate workers as employees instead of contractors “if a company exerts control over how they perform their tasks or if their work is part of a company’s regular business,” according to The Times.
The legislation will affect at least one million workers.
“Many people have been pushed into contractor status with no access to basic protections like a minimum wage and unemployment insurance. Ride-hailing drivers, food-delivery couriers, janitors, nail salon workers, construction workers and franchise owners could now all be reclassified as employees,” The Times reported.
Other states may follow:
The bill could affect legislation in other states as well. A labor group coalition is lobbying for a similar bill in New York. New York City has passed a minimum wage for Uber and Lyft drivers but did not classify them as employees.
Similar bills had been introduced in Oregon and Washington state but were unsuccessful.
“It will have major reverberations around the country,” former Labor Department official David Weil told The Times.
“Two federal proposals introduced since 2018 have sought to redefine the way workers are classified to allow more of them to unionize,” The Times reported. “Those proposals have received support from candidates for the Democratic presidential nomination, including Senators Kamala Harris, Bernie Sanders and Elizabeth Warren. The presidential hopefuls also lent their endorsement to the California bill.”
Costs may rise:
Industry officials estimate the relying on employees rather than contractors would increase costs by 20 to 30%. Uber and Lyft have warned that they will have to start scheduling drivers for shifts, which could reduce their ability to work when they want.
State Sen. Maria Elena Durazo said that the companies’ current model was insufficient.
“Today the so-called gig companies present themselves as the innovative future of tomorrow, a future where companies don’t pay Social Security or Medicare,” she told The Times. “Let’s be clear: there is nothing innovative about underpaying someone for their labor. Today we are determining the future of the California economy.”