California passes new law that could effectively end the gig economy
posted Saturday Sep 14, 2019 by Scott Ertz
The gig economy is the basis for companies like Uber, Lyft, Instacart, Postmates, TaskRabbit, etc. The idea is that you can sign up to be a contractor for the company, setting your hours and working within your confines. You're never required to do a job, and your payment is entirely dependent on how much work you take on. Think of an Uber driver, who is allowed to work when is convenient for them and take or skip any ride that is offered to them. The gig economy has grown into a major player in the market over the past few years and shows no signs of slowing down. Unfortunately, one US state is making it more difficult for those companies to exist.
California has long been known for making it difficult for businesses to thrive. Over the past few years, even their main industry of entertainment has begun to head to better locations, including Georgia and Toronto. Silicon Valley has started to look for alternatives, as well, with some companies moving to other states, and other companies looking for homes abroad.
Continuing this tradition, California is working to pass a new law that risks the future of the gig economy in the state. The law would require companies that use contractors as a core part of their business to treat those contractors as employees. This would mean that companies would be required to abide by minimum wage standards, completely negating the concept of the gig economy.
While the law is still awaiting a signature from Governor Gavin Newsom, it is expected that he will sign it. If the bill becomes law, it could significantly change the way companies such as Uber and Lyft operate in the state. Rather than drivers getting to set their hours, their hours will be set by someone at the company. They won't be able to skip rides, and will likely be assigned rides. Drivers will also be assessed based on performance. All of this will be necessary to be able to pay for the increased costs of treating these contractors like employees.
Both Uber and Lyft have vowed to fight the legislation, both petitioning the Governor and preparing for a possible ballot initiative fight. If all is lost, it would not be a surprise to see these companies, and other gig-economy players, leave the state entirely.
