California Gov. Newsom signs law reclassifying some gig economy workers

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California's governor on Wednesday signed sweeping labor legislation that aims to give wage and benefit protections to rideshare drivers at companies like Uber and Lyft and to workers across other industries.

Uber and Lyft drivers are now classified as independent contractors, sometimes referred to as gig-workers, which means they don't get benefits including Social Security, health insurance, paid sick days and overtime.

AB 5 will also potentially grant former independent contractors the same rights as full-time employees, such as unemployment insurance, overtime pay, the ability to unionize with fellow workers and the opportunity to access health care subsidies. Other requirements in the bill include hiring as employees workers who perform their services under company control and do not earn a living doing the kind of work they do for the company that calls them contractors elsewhere in the market.

Lyft, along with Uber and DoorDash, have each committed $30 million to a would-be $90 million fund to launch a ballot initiative, should an agreement fail to be reached before January 1.

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"The test - known as the "ABC test" and borrowed from statutes in MA and New Jersey - is summarized in the latest draft of the bill: "(A) person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity's business, and the person is customarily engaged in an independently established trade, occupation or business".

In negotiations, Lyft says it offered drivers alternatives to AB5. If the companies don't pass the test, they may be required to classify their workers as employees.

"I'm going to lose clients because I can't provide the trucks they need for their jobs", she said, adding she had already planned to invest $400,000 on two truck upgrades and cannot afford to hire additional drivers or buy additional rigs. "Assembly Bill 5 is an important step", he said.

"I'm proud to have had a small part in redefining labor law in this state and starting a path to reducing income inequality and rebuilding the middle class".

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"However, should this new law negatively impact legitimate independent owner-operators, we will challenge it in every way possible", OOIDA said. "Our fight continues. We ask the state of California to enforce AB 5 in order to protect workers", driver group Gig Workers Rising wrote in a statement. "We've engaged in good faith with the Legislature, the Newsom administration and labor leaders for almost a year on this issue", he said in a statement, "and we believe California is missing a real opportunity to lead the nation by improving the quality, security and dignity of independent work".

Certain workers, such as doctors, hairdressers and real estate agents have secured exemptions from the bill.

Drivers in a ride-sharing company are not core to Uber's business model. Wow.

"Today, we are disrupting the status quo and taking a bold step forward to rebuild our middle class and reshape the future of workers as we know it", Lorena Gonzalez told ABC10.

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