What California’s Gig Economy Law Means for Worker Flexibility
California Governor Gavin Newson signed into law gig worker protections bill AB-5 at the end of last year, with the goal of reducing the misclassification of workers as “independent contractors” rather than employees. The legislation represents an important development in the gig economy because worker misclassification erodes basic protections like a minimum wage, paid sick leave, and health insurance benefits.
AB-5 will impact at least one million California workers who have been forced into contractor status due to workplace trends like outsourcing and franchising work. Workers who could benefit from reclassification include ride-hailing drivers, food-delivery couriers, construction workers, and nail salon workers.
While policy makers proposed the bill to ensure the fair treatment of workers, companies with large gig worker populations, like Lyft and Uber, oppose the bill, saying it will hurt people who choose to prioritize flexible hours. In fact, many app-based companies have fought for exemptions from these new regulations but failed because these kinds of employers exert too much control over how employees perform their tasks and because drivers are central to regular business.
Uber unrolled a secret project early this year, announcing app improvements that would afford California drivers more flexibility and control, enabling these workers to qualify as contractors under the new statutory guidelines. Although the move was motivated by the potential financial gain of circumventing AB-5, these changes are actually a step in the right direction — they provide added flexibility for contractors and compel other companies to develop similar solutions.
We can expect continued pushback from companies across the gig economy. But regardless of whether the pushback leads to legislative changes, we’ll begin to see even more innovative approaches for managing flexible labor pools and flexible schedules. In the meantime, though, how can companies stay compliant, provide stability, and still preserve the flexibility that appeals to gig workers?
Providing stability while preserving flexibility for workers
The new legislation gives workers more employment rights. It also has the potential to help job seekers, as traditional employers in industries like retail, hospitality, and food service are beginning to offer gig-like flexible scheduling through digital workplace technology.
When companies incorporate digital workplace tools to manage the transition, they cut costs, boost flexibility and productivity, and blunt the impact of new laws on worker well-being. These tools offer opportunities for communication and feedback, and give gig workers the power they often lack. By introducing a digital workplace, companies both inside and outside of the gig economy gain the ability to develop more flexible, empowered workplaces.
- Allow workers to set their own schedules. A platform that allows traditional workers to set their own schedules helps traditional employees maintain the same flexibility that gig workers enjoy. Digital workplaces benefit both managers and employees by promoting fair scheduling practices and reducing the amount of time devoted to schedule management. Employees can request time off and swap shifts directly with coworkers, meaning they retain control over their schedules and work-life balance.
- Open up pathways for two-way communication. Within the gig economy, workers often lack agency to communicate with employers or reach out to coworkers. When employees have a platform to raise concerns, speak with supervisors and feel more connected to coworkers, internal communications are simplified and employees have a place to receive recognition they need.
- Provide upskilling opportunities. Giving workers a chance to gain new skills is important in helping workers stay agile in an uncertain and evolving economy. It also helps employees feel satisfied on the job and learn new skills through personalized training plans developed via digital workplace tools.
I’m excited to see how companies respond and adapt to the changing workplace, and build out benefits that initially attracted workers to the gig economy. Flexible scheduling will become mainstream. We’ll see seamless shift swapping, advance pay options, and open shift pools continue to spread.
In turn, gig workers will expect more from their employers — including the same regular communication, training, and advancement opportunities that full-time employees enjoy. Ultimately, gig economy employers must adapt to the new market to compete with traditional employers or risk losing employees to the competition.
Steven Kramer is CEO and president of WorkJam.