California Senate Approves Gig Economy Bill

California legislators approved a bill Tuesday that requires companies like Uber and Lyft to convert contract workers to full-time employees.

The bill passed in a 29-to-11 vote in the State Senate, with the State Assembly passing it as well in what is called a concurrence vote – necessary because of revisions made to the bill in the Senate since it was passed by the Assembly earlier this summer.

The proposed law, Assembly Bill A.B.5, now heads to the desk of California’s governor, Gavin Newsom, who has endorsed the bill and is expected to sign it. Governor Newsom can sign, veto, or let the measure take effect without action by Oct. 13.

Targeting companies like Uber and Lyft, the original legislation swept up other professions, including independent contractors (ICs) working as travel agents.

But after a coordinated lobbying effort by the American Society of Travel Advisors and the California Coalition of Travel Organizations, travel agent ICs were granted an exemption similar to other licensed professions, like lawyers, architects, accountants, insurance agents, and investment advisers.

A.B.5 would go into effect on Jan. 1, forcing companies to designate contractors as employees, where the State determines the company exerts control over how those ICs perform their jobs and if their work is part of a company’s regular course of business.

Uber has already stated that it will fight the law if it is enacted, claiming they are a software platform for services like ride-hailing.

Some labor experts are speculating that A.B.5 could stimulate other state legislatures to draft similar bills, with New York, Oregon, and Washington state in the crosshairs of labor advocates.