California Bill Makes App-Based Companies Treat Workers as Employees

California Bill Makes App-Based Companies Treat Workers as Employees

App-based companies will be required to treat workers as employees after a new California bill was approved by legislators. The bill provides increased protections for workers, but threatens the profits of gig economy companies who count on inexpensive independent labor.

Key findings

"Under the measure, which would go into effect Jan. 1, 2020, workers must be designated as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company’s regular business."

"Many people have been pushed into contractor status with no access to basic protections like a minimum wage and unemployment insurance. Ride-hailing drivers, food-delivery couriers, janitors, nail salon workers, construction workers and franchise owners could now all be reclassified as employees."

"The bill’s passage, which codifies and extends a 2018 California Supreme Court ruling, threatens gig economy companies like Uber and Lyft. The ride-hailing firms — along with app-based services that offer food delivery, home repairs and dog-walking services — have built their businesses on inexpensive, independent labor. Uber and Lyft, which have hundreds of thousands of drivers in California, have said contract work provides people with flexibility. They have warned that recognizing drivers as employees could destroy their businesses."

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