Capitol Alert

Are contracted workers ‘oppressed’ in California? Debate over ‘gig’ economy heats up

A proposed law that would force companies to treat their independent contractors like full-time employees is dividing California workers, with some demanding a path to benefits and others fighting for the freedom that comes with a flexible schedule.

At the crux of the argument is Assembly Bill 5, which would codify the California Supreme Court’s 2018 “Dynamex” decision that limits when companies can classify workers as independent contractors and deny them employment benefits.

The proposal most notably challenges tech giants like Uber and Lyft that depend on drivers who are willing to work without full-time benefits or defined schedules. It could affect hundreds of thousands of other workers, from truckers to makeup consultants in salons.

The legislation was written by Assemblywoman Lorena Gonzalez, D-San Diego, a longtime labor advocate and a candidate for Secretary of State in 2022. Gonzalez said the legislation will “codify” the Dynamex ruling and create opportunity for workers to make minimum wage, earn overtime, sick leave and employee insurance, as well as authorize the right to form a union and collectively bargain.

Both sides have turned out huge demonstrations at the Capitol. Union advocates have argued that independent contractors are effectively employees of some of the world’s wealthiest companies and deserve better compensation. Their counterparts backed by businesses contend contractors don’t want to give up the lifestyle of a gig worker

Al Aloudi, 35, said he enjoys driving for Uber and Lyft, but that he can barely afford medication to treat his diabetes and high blood pressure or support his four kids with his current paycheck. He said he makes $800 to $1,000 per week driving 60 to 80 hours.

“We are transporting the money from passengers to them because we are working the field,” Aloudi said. “I’m happy to work for Uber and Lyft. I’m not happy about how they treat their drivers. AB 5 is going to make drivers and employers sit at one table and talk.”

Aloudi joined the California Labor Federation, a sponsor of the bill, and members of the Gig Workers Rising and Mobile Workers Alliance to rally support for the measure this week.

Among the most vocal supporters was Assembly Speaker Anthony Rendon, who joined workers at the Capitol following the proposal’s passage out of the Senate Committee on Labor, Public Employment and Retirement on Wednesday.

“There’s something about the ‘gig economy,’ the ‘disruption economy,’” Rendon, D-Lakewood, said. “They use a lot of really cute words to basically describe the same old s--t that they’ve been doing for a really long time.”

“People keep acting like they’ve invented new things. It’s the same old thing,” he continued. “It’s about corporations trying to oppress workers. When you hear about folks talking about the new economy, the gig economy, the innovation economy, it’s f-----g feudalism all over again.”

But caught in the dispute are small startup businesses and “mom and pop” shops who skeptical lawmakers said would sink under additional financial burdens.

“Not all businesses are trying to screw people,” said Sen. Mike Morrell, R-Rancho Cucamonga. “I think it’s going to be a blow to our economy. I don’t know how new businesses are going to get started. Most businesses start on a shoestring. Those costs are going to be passed on to the consumers, I bet.”

Thien Tran, a trucking owner-operator who is part of the I’m Independent coalition of workers opposing the legislation, said he put $200,000 of savings and credit on a commercial truck to start his own business.

“If I were an employee, I would not be able to pick the jobs I go on,” he said. “I would make less money and lose everything I put into my business.”

Committee members also expressed concern over the retroactive provision of the Dynamex ruling, and whether it is fair to exclude certain industries from the standard. Physicians, insurance agents, investment advisers and hair stylists leasing their own space in a salon are among a list of workers exempted from the legislation.

The California Chamber of Commerce said it would support the bill if it’s amended to include exemptions additional industries. Others asked for independent trucking contractors to be included.

To be considered an independent contractor under the proposed law, workers must first be “free from the control and the direction” of the company he or she is working for, perform labor “outside the hiring entity’s usual course or type of business,” and routinely engage in an “independently established” trade or business separate from their other work.

Gonzalez’s bill now heads to Senate Appropriations before it can pass the chamber, but Rendon said lawmakers will “make sure the governor signs it.”

“This is our opportunity to stand up for all of you and undo all the mental games these folks have been playing on us,” he said.

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Hannah Wiley joined The Bee as a legislative reporter in 2019. She produces the morning newsletter for Capitol Alert and previously reported on immigration, education and criminal justice. She’s a Chicago-area native and a graduate of Saint Louis University and Northwestern.