California passes bill to reclassify gig economy workers

Sept. 11 (UPI) -- California lawmakers passed a landmark bill that will make it more difficult for companies to classify workers as independent contractors instead of employees, ensuring them greater benefits and protections.

The bill, titled AB 5, passed 29 -11 in the State Senate Tuesday and will force companies to designate a contractor as an employee if the worker was hired to fulfill the company's main business and worked under its direct control.

The bill, which is supported by Gov. Gavin Newsom, will now be sent back to the State Assembly for final approval.

If approved, it will become law Jan. 1, affecting some 1 million Californians who work for so-called gig-economy companies such as Uber and Lyft, ride-sharing businesses that utilize independent contractors for their workforce.

The California Labor Federation called the bill's passing "a historic win" that has the state becoming a leader in workplace rights and setting an example for the rest of the country.

"The misclassification of workers creates a corrosive effect that ripples through our entire economy, undermining our laws to protect and support working people," the workers' rights organization said. "AB 5 is a powerful counter to the corporate greed and rampant exploitation that's driving inequality across our state in emerging and traditional industries alike."

However, the bill had strong opposition from Uber and Lyft, which penned an op-ed in June for the San Fransisco Chronicle, arguing that the bill will do them harm.

"It's also no secret that a change to the employment classification of ride-share drives would pose a risk to our business," Uber CEO Dara Khosrowshahi, Lyft CEO Logan Green and Lyft President John Zimmer said in the op-ed.