California’s Gig Economy Bill Becomes Law

The landmark California gig economy bill that may force companies such as Uber, Lyft, and DoorDash that employ thousands of drivers as independent contractors to hire those people as employees became law today. Democratic Governor Gavin Newsom signed the bill.

Uber argues that the bill does not mean it must reclassify drivers as employees because it claims they are not part of the company’s “core business” (one of the law’s definitions of workers who must be hired as employees). Other requirements in the bill include hiring as employees workers who perform their services under company control and do not earn a living doing the kind of work they do for the company that calls them contractors elsewhere in the market.

If the bill does ultimately affect Uber, Lyft, DoorDash, and other companies in the so-called gig economy thriving on venture capital for the last decade, it will severely disrupt their business models, which rely on cheap labor.

If Newsom’s words upon signing the bill are any indication of the future of gig economy-related legislation in blue states, the days of widespread contractor labor for tech companies whose core businesses would appear to depend on it may be ending.

“Assembly Bill 5 is landmark legislation for workers and our economy. It will help reduce worker misclassification…. A next step is creating pathways for more workers to form a union, collectively bargain to earn more, and have a stronger voice at work.”