Has California AB5 Changed the Gig Economy Already?

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In January 2020, California AB5 took effect. Legislators designed this new labor law to protect independent contractors in the state. It set a standard for hiring independent contractors. It also required businesses to reclassify many of their workers as employees. As a result, businesses must now offer these employees numerous benefits. These benefits included minimum wage, overtime pay, and workers’ compensation. Yet, not everyone likes this new law. Many businesses and workers across various industries have felt the effects in negative ways. This has prompted many different lawsuits and resulted in serious employment issues.

California AB5 and the Gig Economy

How has the new labor law affected the gig economy in the state? From large corporations to small businesses, freelance workers and independent contractors struggled this year. Some industries filed lawsuits to avoid having to classify their workers as employees. Others have laid off workers due to the new law. Here are a few ways the California gig economy has changed since California AB5 began.

Uber and Lyft

Large corporations that rely on independent contractors resisted this new law the most. Companies like Uber and DoorDash refused to grant employee status to tens of thousands of their drivers. Since the passage of AB5, Uber has tested allowing its drivers to set their own rates in some California markets. As a result, Uber drivers in Sacramento, Santa Barbara, and Palm Springs are now free to set their own rates. These rates can go lower or up to five times the original Uber price. In addition, drivers are now free to only accept rides they think are worth it. Whether the courts will rule that this places Uber in compliance with AB5 remains to be seen.

California Truckers

Last month a federal judge blocked California AB5 from applying to more than 70,000 independent truckers in the state. The judge decided that federal rules on interstate commerce superseded the new labor law. The state wants to protect workers and ensure fair labor and business practices. However, the judge believed that the law prevented motor carriers from having the choice to use independent contractors. Congress’s interstate commerce laws sought to prevent this type of intrusion and regulation.

Freelance Writers

New legislation introduced last month wants to exempt newspapers and freelance journalists from the effects of California AB5. The new labor law hit freelance writers and editors particularly hard. Before January, SB Nation ended its use of more than 200 California freelancers in an effort to become compliant with the new law. After the law took effect, the American Society of Journalists and Authors filed a lawsuit. They believed that California AB5 unconstitutionally affected free speech and the media.

Contact a California Labor Attorney

California AB5 has already changed the gig economy. If you have questions about your employment status and California AB5, we can help. Call the Law Office of Christopher Baudino by filling out the confidential contact form for more information. California labor lawyer Christopher Baudino has helped workers in the East Bay, Walnut Creek, Oakland, San Jose, and San Francisco. From labor disputes to employment issues, our law firm is here to offer complete legal guidance. Attorney Christopher Baudino is ready to put his experience and resources to work for you. Call today!

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