A worker reclassified as an employee could end up costing a business up to 30 percent more, thanks to the cost of minimum wage, overtime, workers' comp, disability and other benefits. (Photo: Shutterstock)
If you're a California gig worker, maybe you're really an employee—and in that case, you should be entitled to the protections afforded employees.
That's the thrust of a bill that has just passed the California Assembly, and although it still has to get through the House and be signed by the governor, it has the potential to create huge change for workers.
The San Francisco Chronicle reports that although businesses are opposed to the bill, citing among other things the potential additional cost of providing benefits to workers, the landmark bill AB5 codifies “a groundbreaking California Supreme Court decision,” known as Dynamex.
The decision led to a three-part criteria for determining whether a worker is an employee or a gig worker, known as the ABC test:
A. Control: The company hiring the worker does not direct how the work is performed.
B. Scope: The work is in a field different from the hiring company's business.
C. Independence: The worker runs a business doing the same kind of work performed for the hiring company.
Experts point out that a worker reclassified as an employee could end up costing a business up to 30 percent more, thanks to the cost of minimum wage, overtime, workers' comp, disability and other benefits, and could affect a wide range of the 2 million Californians working as independent contractors. The bill already exempts several white-collar professions, including doctors, dentists, lawyers, architects, accountants, engineers, insurance agents and investment advisors.
And there are plenty of other fields in which the bill could go either way—everything from Uber/Lyft drivers, newspaper distributors, taxi drivers, truck drivers, consultants and travel agents to caterers, freelance writers, graphic designers and language translators. The California Chamber of Commerce and the I'm Independent Coalition of businesses would like to see all the foregoing, as well as other fields, classified as independent contractors.
Even those in favor of the bill say it needs some tweaking before moving on to the next stage, so that small businesses and other professions in which people essentially operate independently are excepted from its requirements.
But while businesses are claiming that they'd have to pass along the higher costs to consumers, those in favor of the bill are cheering. The report cites Edward Escobar, a San Francisco Lyft/Uber driver who also works with the Alliance for Independent Workers, saying that as long as independent contractors truly are independent, all is well. But he points out that that's not always the case, said, “An electrician or plumber sets their own rates, terms and conditions. That's what we want. Uber and Lyft have done a bait and switch; they are undermining what it means to be an independent contractor.”
Steve Smith, a spokesman for the California Labor Federation, told the SF Chronicle that businesses' declaration of passing along higher costs is “the argument they use for any worker protection, whether minimum wage or sick days. In practice, this has potential to have a really positive economic impact on both consumer spending and public services. There's a clear benefit to increasing the buying power of workers by ensuring they get paid a fair wage.”
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
