Proposed legislation to tighten the definition of what constitutes an independent contractor – and, consequently, mandating that most such positions become employee positions – is working its way through the California law-making process and many locals are not happy about it.
Dave Mezger, partner at Mezger Trucking in Yuba City, said the proposed legislation, Assembly Bill 5, is the worst bill ever.
“If this bill passes, it would be a devastating loss for a lot of businesses across every industry,” Mezger said. “From a trucking stand point, it would be absolutely devastating.”
Mezger, who works with roughly 40 independent contractors to haul agriculture products throughout the state, said AB 5 would limit when, where and how truck drivers are able to operate.
“You never know what crops are going to be big in a certain year,” Mezger said. “As independent contractors, these drivers are able to follow the work around the state. Forcing them to become employees would leave them sitting around if their truck cannot be used in their particular area at a particular time.”
Mezger also said many drivers work long hours during the busy season and then take time off during the slower part of the year, a schedule that would not work if they were considered employees.
“If they take extended time off during the off season, they would loose their health benefits as employees,” Mezger said.
Mezger said he and his partners have been very active in voicing their opposition to the bill, writing letters to the state senate and meeting with staff at the governor’s office.
“I hope this does not pass,” Mezger said. “Drivers are already in short supply so there are already problems today. If this were to pass its just going to get worse.”
A Yuba-Sutter Lyft driver, who asked to remain anonymous, said he hopes the bill does not pass because it would change so many aspects of his job that people don’t realize.
“What is boils down to is the tax cuts, flexibility and just the attitude of the drivers,” the Lyft driver said. “If this bill passes it will create a huge mess and I think we will lose a lot of drivers that want that flexibility.”
The Lyft driver said he is able to make more in a day driving for Lyft than he has made in previous positions, while maintaining a flexible schedule that works around his family and personal needs. He also said current laws allow him to claim tax deductions for the depreciation on his car, mileage and cell phone expenses because he is an independent contractor.
“If I was an employee of Lyft they wouldn’t be able to cover all of those costs,” he said.
Assemblyman James Gallagher agreed, saying it’s a bad bill.
“AB 5 and the Dynamex decision are poised to completely upturn the way people work in California,” Gallagher said. (Dynamex is a courier service that had classified all its drivers as private contrators; the California Supreme Court last year rejected that classification; much of AB 5’s language is based on that ruling).
“The flexibility, efficiency and benefits to workers will be eliminated,” he said. “This situation allows power brokers in Sacramento to arbitrarily pick winners and losers, and that’s never a good thing. From truckers to franchise owners, many industries will be impacted.”
Curtis Grima, chief of staff for Gallagher’s office, said many businesses will be unable to transition their existing workforce to employees.
“Classifying a worker as an employee subjects the employer to labor law mandates, including wage and hour provisions, mandatory meal and rest breaks, overtime, and benefits,” Grima said. “In some industries this might make sense, but in others these mandates are unworkable as they would require a complete overhaul of their business model. AB 5 will only serve to push more businesses out of California.”
The bill would exempt specified occupations from the application of standards in the Dynamex ruling, and would instead provide that these occupations are governed by the Borello testing method, which concerns how the business for which service is rendered has control over the manner and means of accomplishing the desired results.
“These exempt occupations would include, among others, licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, direct sales salespersons, real estate licensees, commercial fishermen, workers providing licensed barber or cosmetology services and others performing work under a contract for professional services, with another business entity, or pursuant to a subcontract in the construction industry,” according to language in the bill.
Many major tech and rideshare companies have voiced strong opposition to the bill.
Uber, Lyft and Doordash each put up $30 million on Aug. 29 to fund a ballot initiative that would allow them to provide drivers with some benefits and guaranteed earnings while keeping them as independent contractors. The initiative is anticipated to appear on the November 2020 ballot if the companies are unable to reach a deal with Gov. Gavin Newsom.
At the capital, many lawmakers, including Newsom, continue to show their support for the bill that has already cleared a crucial Senate committee vote.
In an op-ed piece published in the Sacramento Bee on Labor Day, Newsom said the current economy leaves the working class to grow poorer as the wealthy make more money.
“Contributing to this imbalance is the misclassification of workers, where companies eager to save on labor costs identify workers as ‘independent contractors’ rather than employees,” wrote Newsom. “Workers lose basic protections like the minimum wage, paid sick days and health insurance benefits. Employers shirk responsibility to safety net programs like workers’ compensation and unemployment insurance. Taxpayers are left to foot the bill. Reversing the trend of misclassification is a necessary and important step to improve the lives of working people.”
Newsom wrote that his office has been meeting with rideshare drivers, labour unions and tech companies for weeks to “help over 200,000 workers in California increase their wages and benefits, maintain the flexibility many enjoy and form a union to improve their economic security,” and his office plans to continue negotiations.
“My administration will work in partnership with the labor movement to continue this conversation to build paths for workers in our state who want to join a union,” wrote Newsom. “We will work to create good jobs, to improve the jobs we already have and to make those jobs available to all Californians. This is our moment to change the course of this economy.”