The California Senate has passed Assembly Bill 5, legislation that entitles gig workers to things like minimum wage, workers compensation, and other benefits and labor protections.
The bill passed in a 29 to 11 vote. It now goes back to the state Assembly, where lawmakers will vote on amendments to AB5. If the Assembly passes the bill, it will go to California Gov. Gavin Newsom, who is almost certainly expected to sign it.
AB5 expands on a California Supreme Court decision from 2018 known as Dynamex, which dictates businesses use the ABC test to determine whether a worker is an employee or a contractor. According to the ABC test, a worker is an independent contractor only if they are free from control and direction of the hiring entity, perform work that’s outside the usual course of hiring, and engaged in, and “independently established trade or business of the same nature as the work performed.”
You can read a full breakdown of how the ABC test works here.
If signed by Gov. Newsom, AB5 would go into effect on January 1, 2020.
It would also be a huge blow to companies like Uber and DoorDash, who already struggle with profitability and who would see operating costs go up even more. The two companies, along with rideshare service Lyft, recently committed $90 million to support a ballot measure opposing the bill.
These companies, however, are already mired in controversy around how they treat their workers. In January of this year, Uber paid a $1.3 million misclassification settlement to workers. DoorDash, meanwhile, has battled a deluge of bad press around its controversial (though now revamped) tipping policy for drivers.
If signed into law, AB5 would drastically change the gig economy in the state of California, and, most likely, influence other Democratic-controlled states to pass similar legislation. In which case we would see the food delivery landscape drastically change as well.