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California Passes Landmark Bill Requiring Contract Workers To Be Labeled As Employees (#GotBitcoin?)

Despite objections from Uber and Lyft, Gov. Gavin Newsom has said he would sign labor bill that could reshape the gig economy. California Passes Landmark Bill Requiring Contract Workers To Be Labeled As Employees (#GotBitcoin?)

California passed landmark employment legislation that challenges the business model of such “gig-economy” companies as ride-hailing giants Uber Technologies Inc. and Lyft Inc., some of the brightest stars in Silicon Valley over the past decade.

The proposed law, which intends to force companies to reclassify certain contract workers as employees, passed in the Democrat-led state Assembly Wednesday with a preliminary tally of 56 in favor and 15 opposed. The bill passed the state Senate in a 29-11 vote Tuesday night along party lines, with the chamber’s Republican caucus casting the no votes. Gov. Gavin Newsom, a Democrat, has said he would sign the bill if it gets to his desk.

Uber and Lyft have said the proposed law could upend their businesses and lobbied to change the bill. Gov. Newsom, in an interview Tuesday, said he remains personally involved in talks with Uber, Lyft and other gig-economy companies that have sought exemptions from the measure, known as Assembly Bill 5, as well as some of the unions supporting it.

“As it relates to Uber, Lyft, DoorDash, others, some of the gig platforms, these remain ongoing negotiations, and regardless of what happens with AB5, I am committed, at least, to continuing those negotiations,” Mr. Newsom said.

The governor said it was in the best interest of the state to “stay at the bargaining table, to continue to negotiate” and that talks will continue even though a deal wasn’t reached with the companies during this year’s legislative session.

“By no means this delay is a denial, and I’m fully committed—and expressed that to all sides—fully committed to continuing,” he said. “Not jump-starting, not-reconvening.”

In a statement following the vote in the state Senate, Lyft said it was ready to begin a ballot-measure fight next year to win provisions to exclude it from the law.

“Today, our state’s political leadership missed an important opportunity to support the overwhelming majority of ride-share drivers who want a thoughtful solution that balances flexibility with an earnings standard and benefits,” a Lyft spokesman said. “The fact that there were more than 50 industries carved out of AB5 is very telling.”

Together with food-delivery company DoorDash Inc., Uber and Lyft last month threatened to spend $90 million on a ballot measure next year.

Uber and Lyft have been negotiating with lawmakers and the state’s powerful unions in search of a change to the bill, particularly an exemption, in exchange for certain concessions. Their lobbying efforts have been to no avail, even as other industries succeeded, underscoring the strength of labor unions and the degree to which the large Democratic majority in Sacramento has increased scrutiny on tech companies in recent years.

The proposed law, which was introduced last December and would take effect Jan. 1, 2020, would reclassify workers in a range of other industries from trucking to janitorial services to music workers.

The bill codifies a 2018 California Supreme Court decision that set new standards for classifying people previously considered independent contractors as employees. Some experts expect other states to follow suit given California’s economic size and its precedent of creating influential business regulations.

As employees, ride-share drivers would be entitled to benefits such as a minimum hourly wage and workers’ compensation. But the companies have argued the bill would take away much of the flexibility of drivers, who now work whenever they want and can earn more when demand jumps. And some gig-economy executives have indicated they may challenge the law.

The approval of labor unions will be necessary to move forward with any kind of exemption. Mr. Newsom said he was meeting this week with the national leadership of Service Employees International Union, one of the state’s most powerful unions, and planned on continuing discussions with labor leaders. The governor appointed SEIU President Mary Kay Henry as a co-chair of his Future of Work Commission, which is intended to grapple with various issues including how technological advancements will affect employment.

During the state Senate’s two-hour debate Tuesday night, some Democratic senators took direct aim at the gig economy, indicating they may have no interest in any future compromise or exemption.

“Let’s be clear, there is nothing innovative about underpaying somebody for their labor, or basing an entire business model on misclassifying workers,” said Sen. Maria Elena-Durazo, who was formerly a prominent labor activist from Los Angeles.

Republican lawmakers attacked the bill as picking winners and losers. Some moderate Democrats voiced similar concerns, saying they were reluctantly supporting the bill with the expectation of continuing working on the issue next year, when the legislature reconvenes. California Passes Landmark Bill,California Passes Landmark Bill


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