What Is The New California “Gig” Law, and What Does It Mean For Uber and Lyft?

In January of 2020, a new California “Gig” law will take into effect that would reclassify many independent contractors as employees. This would be a huge distinction and would mean many different things for the new California employees. 

Assembly Bill 5 was signed into law by Governor Gavin Newsom on September 18, 2019. The bill, while primarily aimed at companies like Uber and Lyft, redesigns the way workers are classified as employees or independent contractors under California law. 

When workers are classified as employees instead of independent contractors, they enjoy many more benefits from their employers. They are entitled to minimum wage, overtime, paid sick leave, etc. Those companies then also become liable to their employees for any violations of minimum wage or overtime. The classification as employees instead of independent contractors makes it so the companies that hire them have to comply with federal protections for workers, including the Fair Labor Standards Act. 

The new law would write into law and extend a previous decision by the California Supreme Court. The law provides a three-pronged test to classify a worker as an independent contractor instead of an employee. In order to classify a worker as an independent contractor, the hiring company or entity would have to prove that the worker is (1) free from the control and direction of the hiring entity, (2) performs work outside the scope of that of the hiring entity, and (3) is regularly engaged in work of some independently established trade or other similar business. 

According to TechCrunch, Uber plans to continue fighting the measure and has even announced a joint $60 million initiative with Lyft in order to fight the new law. Uber and Lyft would have to reclassify many of the “independent contractors” they use as employees and would, therefore, have to pay them a minimum wage as well as comply with California and Federal employment law that ensures protections for those workers. 

The distinction between workers being categorized as an independent contractor or an employee is an important one. Employees are protected under Federal laws that ensure them of benefits to be provided for by their employer. Part of the benefits of being an employee is the protection of the Fair Labor Standards Act. 

The Wage and Hour team at Forester Haynie is highly experienced with cases regarding the Fair Labor Standards Act, and operates all over the United States. If you think you might be wrongly classified as an independent contractor contact us at www.foresterhaynie.com or call our office line at 214-210-2100. 



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