US State passes Law to make Uber, Lyft Contract Workers, employees of the Company

14 Sep 2019

Categories: International News

It will enhance contract workers’ rights

In a major legislative development that could have a profound impact on the gig economy, California’s State Senate passed, 29 to 11, a Bill requiring ride hailing companies like Uber & Lyft to treat their contract workers as employees.

The Bill, which is likely to pass the State Assembly & get the Governor’s signature to become law, will enhance workers’ rights, increase costs for gig economy companies & potentially have knock-on effects in other States.

The Bill, known as AB 5, is a consequence of a California SC 2018 ruling on employee status & could cost Uber & Lyft $3,625 per driver as per a report from Barclays, released in June.

Various benefits

Overall, the legislative changes could cost Uber $500 million & Lyft $290 million, by giving their workers paid leave, minimum wages, health benefits, collective bargaining rights & so forth.

Uber & Lyft have been opposed to the Bill & had, on Aug 29, announced a $60 million fund to support a 2020 State ballot measure — a mechanism that asks eligible voters whether they approve or reject a proposed law.

The companies’ drivers work as independent contractors & don't get paid medical leave, minimum wage & other benefits that employees are entitled to. Uber & Lyft have said that their ballot measure, would seek to maintain drivers in independent contractor status but give them some protections & rights as regards minimum wage, collective bargaining & health care. DoorDash — a food delivery company — said it would contribute $30 million to the fund.

The State Assembly will vote on AB 5 later this week. California Governor Gavin Newsom is expected to sign the Bill as he has already endorsed it. If passed & signed, the Bill will become law on Jan 1.

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Tags : California Superior Court Uber State Assembly

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