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Gig Worker Law Spawns Dozens of Bills by California Lawmakers

March 10, 2020, 1:31 PM

California’s Legislature will begin considering proposals this month to change the state’s gig worker law, weighing how far to go to amend some of the law’s new requirements.

About three dozen bills to alter A.B. 5, the worker classification law, were introduced ahead of last month’s deadline, and at least 25 await hearings in Assembly and state Senate committees.

One measure has caught the eye of lobbyists and lawyers. It would create a third option besides the contractor and employee classification that, proponents argue, would encompass the flexibility of a contract worker with the labor protections of an employee.

“To look at the world and say you’re either an employee or a contractor is outmoded, it is too black and white,” said Cheryl Sabnis, an employment attorney with King & Spalding LLP in San Francisco.

State Sen. Cathleen Galgiani’s (D) S.B. 1039 has the potential to appease the most vocal critics of A.B. 5, without backpedaling on a law intended to shield vulnerable workers from labor law violations, employment attorneys said.

“I think there is some interest in creating that third category that would indeed provide the bare minimum protections in terms of discrimination [and] maybe even minimum wage, but not require all the bells and whistles of the employment relationship,” said Koray Bulut, an employment attorney in the San Francisco office of Goodwin Procter LLP.

Three Dozen A.B. 5 Bills

But labor groups already are gearing up to oppose Galgiani’s bill. Unions and their backers don’t view the legislation as a compromise, but rather an attempt to weaken the protections A.B. 5 provides.

“It does nothing at all to move the ball forward,” said Steve Smith, spokesman for the California Labor Federation that represents more than 1,200 unions.

Smith sees any attempt to roll back A.B. 5 as an opening for eroding workers’ rights as the gig economy grows.

The three dozen A.B. 5-related bills introduced this year range from proposed changes to help certain professions that rely on contract work, to repeal of the stringent test employers must consider when classifying a worker as a contractor or employee.

All but five are Republican measures that face little chance in either chamber, where Democrats hold two-thirds majorities. Assemblymember Kevin Kiley (R) last month unsuccessfully sought to force a vote on his bill (A.B. 1928) to repeal A.B. 5.

Two are from Assemblymember Lorena Gonzalez (D), author of A.B. 5. The bills would make it easier for freelance journalists, and barbers and cosmetologists, to work as contractors.

Committee Votes in May

Committees are scheduled to debate the bills this month, and lawmakers have until mid-May to vote on the measures and send them to the Senate or Assembly floors.

Written to codify the California Supreme Court’s 2018 Dynamex Operations West Inc. v. Superior Court decision, A.B. 5 creates a three-part test to establish whether a contractor must be classified as an employee.

The question of properly classifying employees and contractors is gaining traction as more people shift to short-term or part-time gigs to earn money. California’s nonpartisan Legislative Analyst’s Office estimates the law will affect about 1 million independent contractors.

Galgiani, a moderate Democrat from a Central California swing district, has yet to amend the bill with details. The text of the first version of the bill proposes a new classification that would include “basic rights and protections relative to work opportunities, including minimum wage and occupational accident coverage.”

Galgiani’s Chief of Staff Bob Alvarez declined to discuss the measure, saying in an email that staff is “learning new things every day that are being incorporated.”

Jeremy Gottschalk, executive director of the Marketplace Industry Association, which backs Galgiani’s measure, said the organization pitched the idea of the bill to the senator’s office “because the Senate was devoid of any Democratic proposal or reasonable compromise.”

‘Uphill Battle’

The worker rights could include a minimum wage, occupational accident insurance to replace workers’ compensation, access to short-term disability benefits, and protection from discrimination, Gottschalk said. The association’s members include services-for-hire platforms like Angie’s List, UrbanSitter, and Thumbtack.

Gottschalk said the measure isn’t based on existing legislation. But New York City took a similar approach in 2016, said King & Spalding’s Sabnis. The Freelance Isn’t Free Act, which took effect in May 2017, offers contractors the right to a written contract, on-time payment, and protections from retaliation.

Since its passage, A.B. 5 has drawn lawsuits, protests, and a ballot initiative campaign to shield rideshare drivers from the law. A.B. 5 made exemptions for dozens of professions, but many gig workers—from musicians to Uber and Lyft drivers—said it could force them out of their jobs.

Gonzalez acknowledged that the law needs tweaking, and proposed amendments last month that would allow more flexibility for journalists and photographers. But major changes to the law are unlikely.

Gov. Gavin Newsom (D) has supported A.B. 5 and proposed more than $21 million in his latest budget to implement the law as it stands. In announcing his budget in January, Newsom said A.B. 5 simply puts into place the Dynamex decision.

Any major overhaul is “very much an uphill battle,” Sabnis said.

To contact the reporter on this story: Tiffany Stecker in Sacramento, Calif. at tstecker@bgov.com

To contact the editors responsible for this story: Tina May at tmay@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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