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Home / Business / AB5, based on California's court decision, moves one step closer to the law

AB5, based on California's court decision, moves one step closer to the law

A measure to curb the widespread use of independent contractors across the California economy moved closer to the final passage of legislation on Friday, even as Uber, Lyft and other gig finance companies launched a hard-line lobbying campaign to reduce its reach.

Landmark legislation, which could set a precedent in a national battle to improve wages and benefits for low- and middle-wage workers, would change the employment status to more than one million Californians.

Caretakers clean downtown buildings, trucks loaded goods in the ports of Los Angeles and Long Beach, construction workers building new homes, manicurists, medical technicians, nightclub strippers and even software coders would be among many professions that offer protection against long-documented abuse. in the workplace.

Assembly Bill 5, which writes a stringent test before companies can classify workers as contractors, cleared a central fiscal committee Friday in the state of Sena Tea. Both houses are expected to pass legislation before lawmakers postpone September 1


If that happens, then Prime Minister Gavin Newsom is expected to sign the bill. "The Governor is supporting the misclassification of workers, which for decades has been a driver of income inequality," said a spokesman for Newsom.

Hundreds of companies have faced lawsuits and government penalties for
treating workers as independent contractors, a decade-long national trend that has taken workers, weakened unions and contributed to what experts call a split workplace between gardens and non-employees.

Some 400,000 Californians are estimated to work either part-time or full-time for fast-growing platform-based technology companies, offering a range of services such as tours, food supplies, household repairs and dog walking.

App-based companies claim that they offer a different employment
model – innovative and flexible – and should therefore be excluded from AB 5. They say that
entrepreneurs, their workers can set their own schedules and work for multiple companies. AB 5 can cost companies millions of dollars,
which prevents future profitability.

Any such improvement in gambling jobs is unlikely this year, but in an aggressive power play, Uber, Lyft and DoorDash on Thursday threatened to spend $ 90 million on an election target 2020, unless legislation passed a new bill allowing them to avoid classify drivers as employees.

The California Labor Federation, which represented 1200 unions with 2.1 million members, pledged to defeat the effort, which, if it comes to fruition, may be one of the most expensive ballots in combat history. [19659002] Newsom has suggested that he can support the group's proposal to create a special employment category for app-based drivers, and his staff has been negotiating the details with Uber and Lyft for months. "There have been many cuts in legislation [AB 5] so it has been a framework for compromise," Newsom told reporters earlier this month.

In a letter this week, 75 law professors, economists and other academics have urged Newsom and lawmakers not to exempt exemptions
gambling jobs, writing that "California is ready to lead the country – yes, to lead the world – with the strongest law on registration to protect workers from misclassification."

Entrepreneurs, including many in multi-billion-dollar technology companies, are not covered by laws that guarantee a minimum wage, overtime pay, sick leave, family leave, unemployment and disability benefits, workers' compensation and protection against discrimination or sexual harassment.

State officials estimate that California loses about $ 7 billion a year in payroll taxes due to misclassification. Companies also do not pay insurance or Medicare taxes for contractors.

  Strict Trucks in Los Angeles

Truckers serving the ports of Los Angeles and Long Beach have filed lawsuits, and the California Labor Commissioner has fined trucking companies for misclassifying drivers as independent contractors.

(Mark Boster / Los Angeles Times)

AB 5 is modeled after a sweeping California Supreme Court decision in 2018 involving Dynamex Operations West, a national parcel delivery company that reclassified its employees as independent contractors, forcing them to use their own vehicles and pay for gas and other expenses – similar to the practices of Uber, Lyft, DoorDash, Postmates and Amazon Flex.

The court put a strict new test: Workers must be treated as employees, not as independent contractors, if their jobs are central to a company's core business, or if the bosses control the way work is done. For example, a solo plumber with his own company who is hired by a bakery to fix a leak can be an independent contractor. But a plumber who works regularly for a plumbing company and is sent out to work must be an employee.

A tighter standard, the court wrote, should prevent companies from avoiding "basic responsibilities" and engaging in a "run to the bottom" … result [ing] in substandard wages and unhealthy conditions for workers. "

By codifying the new test, AB 5 makes it less vulnerable to legal challenge and allows the state, not just the courts, to enforce it. [19659002] Over months of furious business lobbying, the author of the law, Assemblywoman Lorena Gonzalez (D-San Diego), has narrowed the scope of the bill with amendments exempting certain
professions, including doctors, lawyers, architects, engineers, accountants, insurance agents, Realtors, hairdressers, freelance journalists and financial brokers.

The exceptions, she said, allow independent contracts "in professions where people have the opportunity to negotiate for themselves," and where they own their own businesses in professions without a proven history of misclassification and pay theft.

On Friday, new changes raised the concerns of the trucking industry, which has filed suit in federal court trying to overturn the Dynamex decision and had deployed caravans to protest drivers for circling the capital. Owner operators who work for multiple companies – who supply supplies for construction sites, for example – can be classified as independent contractors if they meet strict business property criteria.

But the changes do not exempt the thousands of driverless drivers who work for Southern California transportation companies, which have repeatedly been charged with misclassification and payroll theft by state authorities.

"Trucking has some of the worst offenders," Gonzalez said. "We're not going to strip employee protection."

Other provisions added Friday included exceptions for dentists, podiatrists, psychologists, travel agencies, payment processing agents, photographers, editors and commercial fishermen.

Despite lobbying from California News Publishers Assn., Newspaper holders, who have been plaintiffs in
lawsuits for misclassification, AB 5 was never added to the California Chamber of Commerce's annual list of "job killer" bills, a term that often judges legislation. This is because without a bill, the court decision would still apply and affect a much larger number of companies than AB 5 and invite more litigation.

"AB 5 is a compromise," said Chamber President and CEO Allan Zaremberg. “It deals with certain professions, but not with many other situations. … Organized labor likes everyone to be employees. It is not necessarily realistic. "

The Chamber, he said, is" hopeful for a legislative solution "for companies delivering customers through an app.

Drivers have mounted public protest against
reduced wages
arbitrary terminations and
multi-pay dollar executive pay
and shareholder windfall.
So far, the voices of AB 5 have largely split according to partisans. Democrats support the overwhelming bill, and most Republicans oppose it.

However, some Democratic legislators are often in line with the business which suggests that the legislation does not provide sufficient flexibility to workers. "We must protect workers from exploitation," said Senator Steve Glazer (D-Orinda). "But we should also protect people's right to be their own boss if that's what they want to do – as long as they set their own hours, pay what they want and control the work product."

As Golden State gives up to enforce landmark law, other states are looking at similar reforms. Several Democratic presidential candidates have joined AB 5, and similar legislation has been introduced in Congress.

Said Smith Smith, a California Labor Federation spokesman, "The nation is watching what California is doing."

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