Californian lawmakers were in the news recently for formulating a law that is expected to change the business model of several new-age companies and regulate the gig economy. Let us take a look at what the law aims to do, how companies like Uber have reacted and the different perspectives shaping the narrative.
What is the California Assembly Bill 5 (2019)?
A few weeks ago California legislators approved a bill that essentially reclassifies contractors, freelancers, and contingent workers as full-time employees; thus, making them eligible for basic labor rights like paid time off, benefits, minimum wage, etc1. The bill, named Assembly Bill 5, or, AB 5, makes it challenging for popular employers like Uber, Lyft (the second-most popular cab aggregator in USA) and DoorDash to consider their workers as contractors and confers full-time employment status on them. A few days after the bill was approved by the Senate, the Governor signed the legislation and the law will go into effect from 1st January 2020. Although some industries have been given exemptions, ride-sharing and delivery companies are very much under its purview.2
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