trending Market Intelligence /marketintelligence/en/news-insights/trending/TmR32skQMBlmUf0fm4JTCw2 content esgSubNav
In This List

California Senate passes bill to formalize 'gig' workers in blow to Uber, Lyft

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Volume of Investment Research Reports on Inflation Increased in Q4 2021

Blog

Price wars in India: Disney+ Hotstar vs. Amazon Prime Video vs. Netflix

Blog

Using ESG Analysis to Support a Sustainable Future


California Senate passes bill to formalize 'gig' workers in blow to Uber, Lyft

The California State Senate voted late Sept. 10 to pass a bill that could force "gig economy" companies like Uber Technologies Inc., Lyft Inc. and DoorDash Inc. to classify their workers as employees rather than independent contractors.

The bill, called AB 5, was passed in a 29 to 11 vote and now awaits approval from California Gov. Gavin Newsom to enter into law. Newsom declared his support for it in a Sept. 2 opinion piece in The Sacramento Bee.

"Reversing the trend of misclassification is a necessary and important step to improve the lives of working people. That's why, this Labor Day, I am proud to be supporting Assembly Bill 5, which extends critical labor protections to more workers by curbing misclassification," Newsom wrote.

The bill seeks to align California's labor law with a 2018 California Supreme Court ruling that significantly expanded the number of workers who must be provided benefits as business employees. AB 5 passed the State Assembly on May 29 in a 53 to 11 vote.

Advocates of the bill say it would give independent contractors, such as drivers for the U.S. ride-hailing giants, more protections including overtime, minimum wage and the right to unionize.

Ride-hailing services like Uber and Lyft rely heavily on independent contractors, also referred to as gig workers, helping these companies avoid paying benefits including social security, health insurance, paid sick leave and overtime. Other companies with gig economy business models include food-delivery services DoorDash, Grubhub Inc. and Postmates Inc.

The bill has received strong support from several Democrat U.S. presidential candidates, including Senators Elizabeth Warren of Massachusetts, Bernie Sanders of Vermont and Kamala Harris of California.

Uber, Lyft and DoorDash are preparing to take the issue to a public vote in 2020, which, if successful, may still allow for drivers for ride-hailing services to be exempted from the scope of the bill.

"Today, our state's political leadership missed an important opportunity to support the overwhelming majority of rideshare drivers who want a thoughtful solution that balances flexibility with an earnings standard and benefits," a spokesperson for Lyft said in an emailed statement. "The fact that there were more than 50 industries carved out of AB5 is very telling. We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need."

Uber did not immediately respond to S&P Global Market Intelligence's request for comment.

Shares of Uber and Lyft were down 0.5% and 0.6%, respectively, in aftermarket trading.