The gig economy is being tested, and it’s not just ride-hailing companies like Uber Technologies Inc. and Lyft Inc. that could be impacted.
A widely watched bill winding its way through the state legislature could force a range of freelance workers and small businesses, from rideshare drivers and truckers to therapists and yoga instructors, to become employees — fundamentally changing the nature of contract work.
“There’s a possibility that we may not be able to continue the business as we know it,” said Marco Silva, a 30-year-old truck driver who runs Silva Sons Transport Inc. with his father and brother.
The legislation would codify a 2018 California Supreme Court ruling that requires companies to show their contractors are free from direction and control, that they perform work outside the company, and that they run an independent business or trade.
If they can’t prove those things, companies must treat the workers as employees. The proposed legislation would also expand wage, hour and benefit protection to employees.
“It’s a huge game changer,” said Jennifer Barrera, executive vice president of the California Chamber of Commerce. “It’s going to be positive and negative depending on where you fall.”
Already Silva, who estimates he can easily make six figures in a good year, said he’s seen other truckers get turned away from jobs hauling demolition and construction debris because companies are concerned it could violate the ruling.
“Construction companies are starting to buy their own trucks, so they don’t have to subcontract with people like me,” he said.
Fine-tuning the legislation
The legislative effort, led by San Diego Assemblywoman Lorena Gonzalez and sponsored by the California Labor Federation, has sparked a statewide reckoning over the status of independent workers.
Pro-labor groups argue the rules are necessary because employers have been lowering their labor costs at the expense of workers and taxpayers. Opponents contend contractors and businesses need more flexibility.
The public face of the debate has largely been drivers for Uber and Lyft who want to be treated as employees — by being paid a minimum wage, being eligible for overtime and being allowed to organize as a union to bargain collectively with the companies.
“This is meant to impact primarily workers that don’t have bargaining power, that are basically low-wage workers or even middle-income workers,” Gonzalez said. But she added that there’s more work to be done.
Many say the legislation would have a much broader impact, and the proposal has drawn fierce debate in the Capitol.
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