Capitol Alert

Gov. Gavin Newsom signs bill to expand which California workers get employee benefits

A high-profile bill to expand which workers are entitled to employee benefits will soon be California law after Gov. Gavin Newsom gave it final approval Wednesday.

Assembly Bill 5 enshrines a new employee classification test into state law, codifying a 2018 California Supreme Court decision and carving out exemptions for some professions, including doctors and real estate agents. The new test expands which workers must receive such benefits as minimum wage and paid sick leave.

“The hollowing out of our middle class has been 40 years in the making,” Newsom said in a statement, “and the need to create lasting economic security for our workforce demands action.”

The new test is already the standard in California, but AB 5’s clarifications and exemptions won’t take effect until January 1.

Many industries are still pushing for changes to the bill that would exempt them from the new standards, known as the “Dynamex” test after the Supreme Court decision.

Lawmakers who support the new law say it will force gig-economy companies like ride-share service Uber to reclassify their workers as employees. But Uber’s top lawyer announced shortly after lawmakers voted to send the bill to Newsom that the company will continue to treat its drivers as independent contractors and is prepared to defend that decision in court.

Uber, Lyft and delivery service DoorDash plan to continue negotiating with Newsom and organized labor to strike a deal that would create some new benefits for their workers while allowing the companies to continue treating them as independent contractors. If they don’t strike a deal, the three companies have pledged to spend a combined $90 million on a ballot measure campaign to take the issue directly to voters.

The California Chamber of Commerce, which advocates for businesses in California, said in a Wednesday statement that it would continue pushing for changes.

“The business community will be aggressively pursuing further exemptions next year,” the chamber said in a statement. “The test set forth in the Dynamex ruling does not correctly contemplate the realities of the modern economy nor fairly consider the sweeping impracticalities it would bring to the California economy.

Democratic lawmakers acknowledged that the new policy will likely need further changes to give additional professions breaks from the new employee classification test and said they also plan to continue negotiations into next year. The bill’s author, Assemblywoman Lorena Gonzalez, pointed to recording artists as one worker group that lawmakers may have to pass separate legislation for next year.

Meanwhile, many Republican lawmakers spoke forcefully against the measure, arguing it will force many workers to become employees against their will.

“It stifles innovation and entrepreneurism here in California,” Assemblyman Jay Obernolte, R-Big Bear Lake, said during an Assembly debate on the bill. “I’m tired of hearing people say that this bill empowers workers. This bill disenfranchises workers.”

Gonzalez disputed that characterization and said the new law will be a win for workers.

“This is huge,” the San Diego Democrat told reporters during a news conference shortly after Newsom signed the bill. “I can think of no better way to honor workers and start to rebuild the middle class and start to reduce income inequality in our state.”

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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