Law & Order

California Gig Economy Bill Signed Into Law

By SEMA Washington, D.C., Staff

California Governor Gavin Newsom signed into law legislation (AB 5) designed to curb businesses’ use of independent contractors. Largely aimed at gig economy technology platforms such as Uber, the new law codifies a 2018 California Supreme Court decision (Dynamex Operations West Inc. v. Superior Court) and goes into effect January 1, 2020.

The Dynamex decision implemented what is known as the ABC test, which classifies a worker as an employee if a company controls what they do, their tasks are part of the company’s core business and if the worker does not run an independent business doing the same tasks. Workers deemed employees are then entitled to minimum wage and benefits.

AB 5 narrows the scope of the Dynamex decision as several occupations are exempt from the new test. Uber, Lyft and DoorDash have each pledged $30 million to fund a ballot initiative aimed at overturning the law.

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