Capitol Alert

Late lobbying is fast and furious as California lawmakers decide who’s an employee

Days before California lawmakers act on legislation to force employers to treat independent contractors as employees, questions remain over which industries will secure an exemption in what’s considered the most consequential labor bill of the year.

Assembly Bill 5 would codify the 2018 California Supreme Court “Dynamex” decision that restricts when employers can classify workers as independent contractors and deny them benefits like overtime, sick leave and minimum wage.

Doctors, dentists, real estate agents, hair stylists, salespeople and others are exempt from the proposed shift in the current version of the bill. Dozens of other companies, from gig economy giants Uber and Lyft to newspapers, also want carve-outs.

Robbie Hunter, president of the State Building and Construction Trades Council of California, said Wednesday he expects the bill to reach Gov. Gavin Newsom before the end of the legislative session.

Hunter said Newsom chief of staff Ann O’Leary, however, told him the governor’s office wants some consideration made for Uber and Lyft, which have fought against classifying their drivers as employees.

Earlier this week, Hunter was cut from a task force Newsom is putting together on the future of work, a development first reported by news outlet CalMatters.

Hunter told The Bee he learned the governor’s office revoked his appointment to the committee, partly due to disagreements over housing legislation and primarily because of disagreements over how to treat companies that provide on-demand services in the construction industry.

“It came from conversations I’ve had with the governor’s office,” he said, pointing specifically to a discussion he had with O’Leary. “They believe that these platforms should be exempt from Dynamex, and I disagree.”

Asked whether the administration supports an exemption for gig economy companies like Uber and Lyft, Newsom’s office didn’t directly weigh in, but provided a statement from O’Leary saying the governor’s office strongly supports allowing ride-share drivers to unionize.

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A ride share driver circles the capitol building as hundreds of Uber and Lyft drivers converged on the California state Capitol on Wednesday, Aug. 28, 2019 to support AB 5. The bill would force “gig economy” employers to treat independent contractors as employees. Jason Pierce

“Any suggestion that this administration isn’t aggressively fighting for the right of workers to organize and earn higher wages – including rideshare drivers – is flat-wrong,” she said in a statement. “Since day one of these talks, organizing 200,000 drivers – represented by real unions with real collective bargaining rights – has been a key goal of these discussions.”

Hunter said he’s confident AB 5 will pass with adequate worker protections because of backing from top Democrats in the Legislature.

But he worries Uber and Lyft will orchestrate a gut-and-amend, a tactic where the text of an existing bill is stripped and replaced with an entirely new bill as a way to introduce new legislation late in the year. That could provide a separate piece of legislation for the gig economy to secure its own exemption, Hunter said.

Other professions are also asking for exemptions.

Amy Ahlfeld said she’s been practicing as a licensed clinical psychologist in Sacramento for 10 years. She spoke out against AB 5 last week at the Capitol alongside other healthcare workers.

Ahlfeld said early-career psychologists working toward their licenses often contract with a hospital or clinic to complete their mandatory training hours. She also said she works contracted hours into her private practice schedule for evaluations at a veterans group and a workers’ compensation agency.

“Those are super important to me because I don’t want my whole practice to be that, but it allows me to have one slot a week to do these evaluations to stay connected to these communities and feel like I’m doing service,” Ahlfeld said. “If this bill is not amended and we are not exempt, I don’t see how I would be able to do that anymore.”

Newspapers want carve-outs for their carriers, said California News Publishers Association chief counsel Jim Ewert. If they aren’t exempt from the employee test in the Dynamex ruling, it could be a “death knell” to some papers already under financial pressure, he said.

“We’re still waiting to hear back from the author’s office,” about a possible exemption, Ewert said, adding that CNPA is “quite frankly getting a little nervous because that window is closing rapidly.”

The bill faces a scheduled vote in the Senate Appropriations Committee on Friday. It must then clear both chambers of the Legislature and secure Newsom’s signature before becoming law.

In the meantime, all sides are fighting hard. Uber and Lyft drivers who want their companies to treat them as employees held a rally at the Capitol on Wednesday. Meanwhile, the companies themselves are promoting suggested amendments to the bill that would exempt drivers but provide them new protections.

Uber driver and organizer Jeff Perry of Sacramento speaks in supporter of Assembly Bill 5 at the California state Capitol on Wednesday, Aug. 28, 2019. The bill would force “gig economy” employers to treat independent contractors as employees. Jason Pierce

The bill’s author, Assemblywoman Lorena Gonzalez, said during a July hearing that exemptions are still being considered. But, she added, the industries already given exemptions were chosen for a reason and she’s been clear that she has no plans to exempt the rideshare companies.

“By and large, the exempted professions under this bill tend to operate with significant autonomy and bargaining power in the workplace and have historically existed outside traditional wage orders,” the San Diego Democrat said. “In other words, most of these folks make over twice the minimum wage, which is our standard in existing law for any individual to be exempted from overtime and meal and rest period requirements.”

Newsom has remained tight-lipped on how he’d like to see the bill delivered to his desk. But he said his office has been in many hours of negotiations for months with Uber and Lyft and other interest groups about Dynamex. He said O’Leary has been heavily involved and that AB 5 has “consumed most of her days.”

“It’s a tough one. Everyone knew it was a tough one. It’s been on our minds,” Newsom told reporters earlier this month. “There’s been a lot of carve-outs in the legislation so there has been a framework of compromise, otherwise you would not have seen those amendments made to the original legislation carving out certain industries... there are other industries that are looking for similar support, and we’ll see if that’s possible.”

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A ride share driver holds a sign from her car as hundreds of Uber and Lyft drivers converged on the California state Capitol on Wednesday, Aug. 28, 2019 to support AB 5. The bill would make it harder for companies to classify workers as independent contractors. Jason Pierce

Lyft spokesman Adrian Durbin said the company is working on what he characterizes as a middle-ground solution.

He said it would include a minimum earnings floor, benefits tied to production and, though he stopped short of endorsing unionization, a way to organize workers’ voices.

“We are advocating for a new model that would provide benefits and guarantees to drivers while maintaining the flexibility that is so important to them,” Durbin said. “We’ve heard from many drivers that they want more of a say in these policies. We know they want a stronger voice, and we agree with that.”

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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.
Sophia Bollag covers California politics and government. Before joining The Bee, she reported in Sacramento for the Associated Press and the Los Angeles Times. She grew up in California and is a graduate of Northwestern University.
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