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A bill before the California state senate could upend the gig economy. The bill, known as AB5, cleared a crucial Senate committee vote last week and may come up for final votes in the state Senate and Assembly as early as next week. Governor Gavin Newsom supports AB5 and is expected to sign the bill if passed by the legislature.
The bill makes it harder to classify workers as independent contractors by codifying an employment test from a groundbreaking 2018 California Supreme Court decision. This “ABC” test says that for a worker to be a contractor rather than an employee, they must meet three conditions: A) they must be “free from the control and direction of the hiring entity” in their work; B) must perform work outside the “usual course of the hiring entity’s business;” and C) have their own independently established trade, occupation, or business.
These conditions are much stricter than current state and federal rules for independent contractors. If AB5 becomes law, up to 10% of the state’s workforce will be affected. Most “gig”-economy employers, such as Uber, Lyft, and TaskRabbit, are not expected to pass the ABC test and so their workers will become employees. However, AB5 is loaded with exemptions for specific types of workers, including doctors, architects, engineers, independent hair stylists, realtors, commercial fisherman, insurance agents, investment advisors, and direct-sales salespersons.
The following is a sampling of arguments for and against the Motion:
Arguments for the motion: Tech companies and other employers have eroded people’s basic labor protections by classifying them as independent contractors, which denies them basic safety net protections like workers’ compensation and unemployment insurance. All workers deserve these basic job protections. AB5 provides workers the dignity and respect they deserve and also provides certainty and clarity for workers and employers. If a person truly wants to be their own boss, they can take steps to meet the ABC test.
Arguments against the motion: There is no doubt that AB5 will make it harder to do business in California. Most gig workers actually prefer the freedom and flexibility of being independent contractors. Many gig workers do not work by the hour but by the job, and they choose to spread out their jobs, but (per California “piecemeal work” law), as employees they will have to be paid for “breaks” between jobs, which is untenable. There are other less destructive ways to address issues associated with the rise of gig work.
What do you think of this controversial issue? Join us at SFDebate to share your opinion and debate those of others. Attendees will be charged $5 at the door.