According to the New York Times, California recently passed a bill that will require app-based companies, including Uber and Lyft. to treat contract works as employees.
The bill, called the Assembly 5 bill, will affect at least one million workers. It will help workers that have been working as contractors and struggling with no access to “basic protections,” such as minimum wage and unemployment insurance, the New York Times reports.
Numerous workers and political figures have been praising the bill, especially as it is expected to increase fairness, boosts worker protections, and create opportunities for employees working under app-based services and gig-companies – which depend on contracted work for their customer base. “It will have major reverberations around the country,” David Weil, who worked under the Labor Department during the Obama administration, told the New York Times.
Dealing with Mixed Feelings
While the newly passed bill appears to help workers and has the potential to boost California’s economy, not everyone is happy about it. A spokesman from Lyft told the New York Times that legislators who passed the bill “missed an important opportunity” to support workers who want their job to “balance flexibility with an earning standard and benefits;” this is especially the case for contractors who like to make their own scheduling decisions.
Industry officials have said that when companies have to rely on employees instead of contractors, costs increase by 20 to 30 percent, which may happen with the passage of this bill. This can cause companies to take control of contractors’ schedules, which could reduce those workers’ freedom to decide when and how often they work. It could also limit the number of employees that are needed, too; for example, driving companies like Uber and Lyft could opt for a smaller number of employees, some of whom are scheduled during slower hours or slower markets. This may cause drivers to not rake in as much revenue, and thus reduce the companies’ need to keep a larger number of employees. Uber recently laid off over 400 workers earlier this month, the New York Times says.
For now, decision makers will have to wait and see how and if the Assembly 5 bill will benefit companies and employees – it won’t go into affect until Jan. 1 of next year.