California Gov. Gavin Newsom (D) has signed a controversial bill into law that would reclassify gig workers as employees, potentially disrupting the way numerous Silicon Valley companies including Uber and Lyft do business.
The law, formerly known as Assembly Bill 5 (AB5), would entitle independent contractors to perks, including benefits, a minimum wage, and overtime.
“California is now setting the global standard for worker protections for other states and countries to follow,” Democratic State Assemblywoman Lorena Gonzalez, the bill’s author, said in a statement Wednesday.
Gonzalez said the law could affect up to a million workers, according to reports.
Newsom said in his signing statement that he intends to keep talks going with labor and business leaders so that gig workers can collectively bargain.
“I will convene leaders from the Legislature, the labor movement and the business community to support innovation and a more inclusive economy by stepping in where the federal government has fallen short,” the governor said in his signing statement.
Uber has vowed to defy the law, saying that it won’t reclassify drivers when the measure is expected to take effect in January.
“We believe California is missing a real opportunity to lead the nation by improving the quality, security and dignity of independent work,” Uber spokesman Davis White reportedly said.
The ridesharing company’s top attorney said in a recent statement that Uber is exempt from the law’s requirements because drivers’ work falls “outside the usual course of Uber’s business.”
Uber and competitor Lyft have staunchly opposed the bill, pledging to spend tens of millions of dollars to fight it. Uber has proposed a minimum wage for drivers, a move seen as an attempt to combat the California bill.
The new law would also affect food delivery companies like DoorDash, which rely on gig workers to fill driving positions.
In an effort to assuage corporate concerns, Gov. Newsom told the Wall Street Journal that he’s still in discussion with Uber, Lyft and other affected companies about potential negotiations on the measure.
Labor organizers have seized on the law as an opportunity to push unionization efforts among drivers.
“AB 5 is only the beginning,” Edan Alva, a driver with Gig Workers Rising, recently told USA Today. “I talk daily to other drivers who want a change but they are scared…That is why a union is critical. It simply won’t work without it.”